CIO Straight Talk Issue 5

www.straighttalkonline.
com
Issue Number 5
MAKING
ENTERPRISE
MOBILITY
A REALITY
Innovative mobility initiatives at Walmart,

Merck, Qatar Airways, Dr Pepper
Snapple, and other forward-looking
companies.
PAGE XX
www.straighttalkonline.com
Issue Number 5
Content
Cover Article
Making Enterprise
MOBILITY A REALITY05
Innovative mobility initiatives at Walmart, Merck, Qatar Airways, Dr Pepper Snapple,
and Montreal Transit
Straight Talking
19
23
The ROI of Hard Work
Running IT Like a Business . . .

at a Giant Nonprofit
Kristin Russell, former Secretary of

Technology and CIO, State of Colorado
19
Terry Bradwell, EVP and CIO, AARP
23
Seven Habits of the Highly

Successful CIO
Seven Essentials of the Highly

Successful IT Function
Brian Adams, CIO and Director of

Procurement, WorleyParsons
Turkka Keskinen, CIO, UPM
33
23
Reimagining IT
Richard Seltz, CIO and VP,
Information Technology, Chemtura
Emerging Technology,
Emerging Markets
Vivek Vasudev Kamath, Executive
Director, MSD (Merck) India
Issue Number 5
27
Culture Change: IT as an
Innovation Engine
Annabelle Bexiga, EVP and CIO,
TIAA-CREF
Big Thinking
19
Shifting Gears
Timothy Heffron, Vice President,
Human Resources, and CIO, Meritor
Solution Spotlight
Tackling Two Big

IT Challenges
19
59
The CIO Role in the
Enterprise of the Future
Andrew McAfee, cofounder,

Initiative on the Digital Economy,
MIT Sloan School of Management
Reborn Digital: Reinventing

the Enterprise for the Digital Age
Steven Cardell, President, Enterprise
Services and Diversified Industries,
HCL Technologies
19
Proactive Obsolescence:
Turning ASM Costs into
Change-the-Business
Investments
Mark Hirst, Global Head, Public

Services, HCL Technologies
55
Failure Can Wire
Your Brain for Innovation
Michele Gallen, CEO, Shhmooze
CIO Straight Talk Team

Editor Paul Hemp
Managing Editor Ritesh Garg
Contributing Editors Stephanie Overby, Glenn
Rifkin, Alan Earls
Copy Editor Amy Halliday
Art Director Neha Sharma
Digital and Social Anirban Sanyal
Events and Webcasts Mishtun Chatterjee
Distribution and Leverage Atul Sharma
Editorial Advisory Board Anant Gupta, Krishnan
Chatterjee, Apurva Chamaria, Amar Singh, Harsh
Kumar
Printing Quality Printing, Pittsfield, MA, USA
Lustra Print Process Pvt. Ltd., New Delhi
Acknowledgements
Utkarsh Srivastav, Sanjeev Kaul, Arun Menon, Gangeya
Purushottam, Vinay J. Mathew, Abhishek Singh, Paresh
Vankar, Vikas Goel, Abhishek JM, John Meyer,
Pichumani Sathyanarayana, Marc Chesover, Gaurav
Kumar, Hitesh Parekh, Neeraj Singh, Sudha
BalasubramanyanBiswajit Rath, Gangeya Purushottam,
Shoba Pfaff, Siva Charvu, Shimona Chadha, Gaurav
Kapahi, Shirish Sahay, Yasser Ahmed Khan, Krishna
Kotipalli, Bhaskar Vedula Rao, Nikhil Chakravarthy
Manupati.
Contact Us
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HCL Technologies
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sharma.atulsh@hcl.com
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CIO Straight Talk is a periodical published by HCL Technologies (HCLT) meant for its existing and prospective clients for
information purposes. The information contained in the
publication contains general views based on the experiences
of technology practitioners and subject matter experts within
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All rights reserved. Excerpts may be reprinted with attribution to HCL Technologies.
The Wisdom of Your Peers

We recently launched a sister publication to CIO
Straight Talk, called CTO Straight Talk. Like the
magazine you are reading now, CTO Straight Talk
highlights the thinking of those working in the field
in that case, CTOs and other senior product
engineering executives. As we put together the first
issue, I was struck again by the value of our content,
value that flows from our decision to showcase
practitioner thought leadership in these two Straight
Talk publications.
The inaugural issue of CTO Straight Talk
(magazine.straighttalkonline.com/cto/issue1)
includes a cover article (The Internet of Experiences)
that offers a new take on the Internet of Things. The
issue also includes an interview with Tim Brown, the
CEO of IDEO, on how design thinking can enhance the
experiences and things of the Internet of Things.
But the heart of the first issue is a series of articles
by product engineering executives from Fortune 1000
companies. Each one offers insights that could only be
distilled from the professional experiences of
executives like these.
Which brings us to this issue of CIO Straight Talk,
also packed with practitioner insights. For the cover
article, we talked to CIOs and mobility heads at six
companies, ranging from Walmart to Qatar Airways,
about initiatives theyve launched to turn the promise
of enterprise mobility into a reality.
The Straight Talking section features articles by
CIOs offering a wide variety of views on an equally
wide variety of topics from seven habits of the
highly successful CIO to tackling an IT problem of
tremendous complexity and massive scale. The
authors organizations are in industries as different as
financial services and automotive; they include
nonprofits and government; and they are based in the
U.S., Finland, India, and Australia.
We hope the issue inspires you to share your
professional insights with peers on the CIO Straight
Talk group on LinkedIn (http://lnkd.in/CIO Straight
Talk). Im confident they will find your ideas useful,
just as we hope you will benefit from the peer insights
youll find in this issue.
Paul Hemp
Editor
Cover Article
MAKING
ENTERPRISE
MOBILITY
A REALITY
For all the hype surrounding enterprise mobility the

declarations of both its benefits and its risks most
companies are still in the early stages of implementing
mobile strategies. Here are the stories of five companies
that are turning talk into action.
Tectonic shifts in the technology landscape are nothing

new to CIOs. If youre not ready for familiar strategic
landmarks to disappear every few years if youre
uncomfortable with the maps used to plot your IT strategy
becoming irrelevant youre in the wrong business.
Take the emergence of mobile computing. The
confluence of laptops, smartphones, tablets, cloud
services, and high-speed broadband 3G and 4G networks
over the past decade is changing the very nature of
business. Outside the organization, mobile computing is
transforming how companies interact with customers and
prospects. Within the organization, it is allowing
companies to work smarter and faster while raising
security risks and weakening the CIOs control of a
companys technology framework.
For example, the so-called consumerization of IT and
the BYOD phenomenon you bring your own device to
use at work, and with it heightened expectations for
computing convenience and capabilities represent a
massive cultural reshaping of a companys technological
environment. CIOs who spent their careers overseeing a
monopoly in corporate IT now face competition from end
users who have already experienced the benefits of
state-of-the-art mobile consumer devices. In fact,
enterprise mobility initiatives are often driven by senior
executives with iPads who are insisting on the same
dexterity with their corporate data that they have with their
personal data.
The magnitude of the changes wrought by mobile
computing is evident in analysts estimates, predictions,
and assessments:
Mobile devices now outnumber human beings, with an
estimated 7.3 billion mobile devices in the world in 2012
and just under 7 billio n people , according to Forrester
Dr Pepper Snapple: A Mobility

Slingshot to Battle the Giants
When your chief rivals are Coke and Pepsi, you need all
the competitive weapons you can get.
For Tom Farrah, CIO of Dr Pepper Snapple Group,
one such weapon is enterprise mobility. In the beverage
and consumer packaged goods industry, visibility and
shelf space are crucial to success. DPSGs decision to
provide its 2,400 account managers with iPads
equipped with real-time account information,
promotional material, and critical sales data for every
customer is transforming how the company competes
with rivals and is already helping to increase sales.
In just over a year, mobile technology at Dr Pepper
Snapple has shifted much of the complexity of doing
business from the customer-facing front end to the
Research.
Mobility is converging with social, cloud, and big data
forces into a nexus that is driving disruptive changes to
IT, businesses, and society overall, according to Gartner.
The global enterprise mobility market will reach $140
billion by 2020, growing at an annual rate of 15%,
according to HCL Technologies.
The number of smartphones in use is about to surpass
the number of PCs in use, according to technology analyst
Benedict Evans.
In 2013, 56% of companies created organization-wide
mobile strategies and 47% increased investments in
mobile and wireless capabilities, according to IDC.
But being aware of and comfortable with the seismic
transformations brought on by mobile computing isnt the
same as staying ahead of them. For all the hype
surrounding mobility these days, most companies
initiatives are in the nascent stage, and the CIOs role in
them isnt always clear. Dan Bieler, an analyst with
Forrester Research, has written, CIOs will be responsible
for introducing technology solutions that help break down
silos, boost cross-team collaboration, drive the end-to-end
customer experience, and engage more deeply with
customers. In order to succeed, CIOs must go beyond
technology enablement and support organizational and
cultural transformation.
Given that the devil is in the details, CIO Straight Talk
reached out to a cross-section of organizations that are in
the midst of enterprise mobility efforts. Their stories offer
examples of mobility initiatives that are already resulting
in significant improvements in companies internal
processes and productivity, as well as in their relationships
with external customers.
technology-enabling back end. Gone are the outdated

print-laden binders that an account manager had to lug
into every retail outlet he visited, replaced by sleek new
iPads loaded with custom-made apps for solidifying the
crucial relationship with store managers.
In a brand-based marketplace, Dr Pepper has long
been a major force. The beverage, created in 1885 by a
Waco, Texas pharmacist, is the oldest soft drink in the
United States. Part of the Cadbury Schweppes empire
from 1995 until 2008, the Dr Pepper Snapple beverage
group was spun off into a stand-alone, publicly traded
company. The $6 billion business, which owns more
than 50 iconic trademarks, including Dr Pepper,
Snapple, Motts, Schweppes, and 7 Up, is sold through
retailers around the world, from Walmart to
mom-and-pop convenience stores.
The company is heavily dependent on a very mobile
sales force that is responsible for direct store delivery.
16 CIO Straight Talk
Account managers spend their days visiting

individual customers to take replenishment orders and
sell incremental activities such as promotions, displays,
and other sales-generating offerings. Given the
real-time, data-intensive nature of the business, these
account managers have long been prime candidates for
mobile technology. And until 2013, they (and the delivery
drivers) did indeed carry rugged Motorola handheld
devices. These devices, still used by delivery companies
like Fedex and UPS, work well enough for replenishment
order taking: An order, input at the retail location,
triggers a delivery over the next 24 to 48 hours.
But Farrah, a Cadbury veteran, had more ambitious
plans. Providing retailers with information about
incremental promotional activities turns out to be a
complex task. Typically, the account manager carried
around printed material with information on all
promotions, ads, and sales activities for the month.
Given that DPSG has 150 sales regions around the U.S.
(each of which includes dozens if not hundreds of
retailers) and that the company comprises more than 50
individual brands (each with its own pricing changes,
special promotions, and point-of-sale materials), the
task of keeping updated binders with accurate
information readily available for each account manager
had become a black hole.
You have account teams selling to Walmart or
Target or Kroger, Farrah says. You have mom-and-pop
stores all over the place. Every brand has its own
The last thing they want to do is say,

Let me walk you through this
promotion, then hit a button and stand
there waiting for it to download. When
they synchronize their device in the
morning, it is all downloaded then and
there, so even if they are in a location
without cellular service, it doesnt
matter.
Tom Farrah, CIO, Dr Pepper Snapple Group
marketing activity, and every retail customer has its own

account team creating different promotions and
activities. When you take all the factors into account for
our company all the brands and how we license with
our bottlers there are over 12 million possible
combinations of brand, bottler, and customer that need
to be communicated to and executed at the store level.
Farrah saw that the sales binders with their dirty,
torn pages and often out-of-date information had to
go. We decided to rebuild that application on an iPad,
Farrah says. We started by moving the order entry
application from the rugged handheld device to the iPad.
Just by redesigning that application, we learned how to
take advantage of the iPad interface, and we focused on
the user experience down to the nth detail. The
application, built internally in IT, synchronizes all new
data automatically to the mobile device. Any new
customers, products, pricing changes, or other
information is available in less than a minute with a
touch of the screen before salespeople set out on their
routes in the morning.
The pilot program, launched in the first quarter of
2013, was an immediate hit; salespeople reported that it
cut their order-replenishment time in half.
Phase two of the pilot was to get all the additional
promotional material on the iPad. Now, when an account
manager checks his route for the day, he sees a list of that
days customers. When he clicks on a particular
customer,
the
system
instantly
brings
up
customer-specific promotional activity, including
pricing, packaging, point-of-sales materials, and the
promotion timeline.
These guys usually have about two or three minutes
of a store managers time, Farrah says. The last thing
they want to do is say, Let me walk you through this
promotion, then hit a button and stand there waiting for
it to download. When they synchronize their device in
the morning, it is all downloaded then and there, so even
if they are in a location without cellular service, it doesnt
matter.
The most daunting task for IT, Farrah notes, was
building the back-end engine that could gather and
distribute all that material. Using the companys internal
portal, Splashnet, Farrahs team created MySplashnet,
an intelligent personal portal for each individual in the
organization. When an account manager opens
MySplashnet, it knows who and where he is and provides
all his daily operational metrics.
Having rolled all this out far more quickly than
anticipated, Farrah wasnt done. Each account manager
also has mobile BI (business intelligence) that is
personalized to his account. He can click on My Route
and see, through a mapping device, each store he will
visit that day. Each stores icon is accompanied by a
balloon that opens to a box showing every brand and
package that DPSG sells to that retailer, along with
current sales, month-to-date, year-to-date, and what the
average is and ought to be. If a salesperson is behind for
the month, it tells him how many cases he needs to sell. It
also ranks the salespeople in that region so he knows
where he stands.
Though sales force mobility capabilities are

becoming standard operating procedure in the industry,
Farrah believes that DPSG, in providing tailored data to
individual account managers, is ahead of rivals such as
Coke and Pepsi.
His objective for 2013 was to increase sales for the
business, and although he cant attribute specific sales
increases to the mobility rollout, given the variety of
factors involved, the anecdotal evidence has been
gratifying. For example, the president of Farrahs
business unit told him, Im not worried about
calculating the value thats come out of this, because I see
whats going on in my business and theres no question
it is helping us to grow sales.
Thats feedback from the business side that any CIO
would welcome.
Merck: Go Fast, Be Ambitious

When Merck, the $44 billion pharmaceutical giant,
embarked on its enterprise mobility journey four years
ago, it took an unusual route. Many companies were
initiating their mobile efforts with the sales force so that
salespeople could access information in the field. But
according to Randie Schlamowitz, executive director of
Merck IT, Merck decided to emphasize the enterprise
in enterprise mobility and enable its entire corporate
environment holistically.
We built a company-wide mobile network, she
explains. We made sure we had security in place and
that data was protected on mobile devices. We brought in
a mobile device management tool, and we were able to
track company-purchased mobile phones and, over time,
personal devices, too. We supported e-mail and calendar
and all the standard productivity capabilities.
From there, Schlamowitz began to consider Mercks
SAP-based ERP environment as a fertile landscape for
taking mobility further. She began with a small pilot
program. In a company the size of Merck, where many
factors performance, usability, support, etc. need to
be considered, pilots are essential. The initial pilot
enabled the approval of an expense report using a
Blackberry or an iPhone. After the success of that effort,
the pilot was then expanded to more than 1,000
managers across the company. It wasnt earth-shaking,
but it was a start. Our philosophy for enterprise mobile
applications is that we build them pretty rapidly in
anywhere from eight to twelve weeks and deploy them
among a small pilot user group, Schlamowitz says. We
get feedback to ensure that there are no issues before we
deploy the app to a broader user base.
After its initial forays, the company began to get more
ambitious. What would it take to enhance productivity
for managers, for the sales force, and for others around
the organization? Schlamowitzs group investigated
available mobile enterprise application platforms, or
MEAPs, and selected an SAP technology that plugged
seamlessly into the companys SAP landscape. Her team
used this technology to rapidly enable certain key
transactions on mobile devices, primarily iPhones and

iPads, as the Blackberry, the companys traditional
smartphone of choice, was eclipsed by rivals.
Unlike most U.S.based companies, Merck made its
most dramatic foray into enterprise mobility off-shore,
specifically in China, an important emerging market for
the company. In that case, the sales organization was the
focus. The laptop devices they had been using were slow
and were not effectively connecting to the network.
Under Mercks single-device strategy, Chinas
3,500-member sales force all received iPads and were
initially given ten mobile capabilities, including access to
their enterprise portal, documents stored in SharePoint
(Microsofts web-based collaboration software), the
enterprise learning management system, and travel
expense reporting. This last capability was particularly
innovative, allowing a salesperson to quickly create an
expense report, snap a photo of a receipt, and transmit it
instantly on the iPad to the corporate back end. A process
that had taken 26 minutes through the corporate portal
was reduced to less than five minutes on an iPad. Given
the success demonstrated in China, which included a
close collaboration with business colleagues who
changed their traditional ways of working to adopt
mobility, these capabilities were ready to be deployed to
the enterprise. The team continues to develop innovative
mobile solutions across Merck and is working with
Manufacturing to leverage mobile devices and
applications to enhance productivity.
Mercks mobile philosophy has diluted the oft-heard
refrain in corporate environments that the CIO and IT
When we embarked on this journey, we

looked at it holistically. Organizations that
focus primarily on mobility as a sales
force enablement technology dont
necessarily think about the broader
enterprise.
Randie Schlamowitz,
Executive Director, Merck IT
are impediments to the BYOD and mobility trend, trying

to protect their turf and control the distribution of
technology. For mobility, IT at Merck has been the visible
champion.
When we embarked on this journey, we looked at it
holistically, Schlamowitz says. Organizations that focus
primarily on mobility as a sales force enablement
technology dont necessarily think about the broader
enterprise.
Mercks CIO at the time made it clear that whatever
we do, we need to do it for the enterprise, Schlamowitz
says. Clark Golestani, who has been CIO for the past two
years, has strongly supported and expanded that
philosophy. Schlamowitz says that at least 50% of the
companys 74,000 employees around the globe
eventually will benefit from the companys mobile
capabilities.
What are the lessons from Mercks mobility efforts?
Mobility is all about speed and forward momentum,
Schlamowitz explains. You need to approach mobility a
little bit differently in that you have to leverage the
appropriate standard development practices using a
much more aggressive timeline. Its not just the group
thats building the app; its the group that is testing the
app, its the group that is supporting the app, its the
group thats changing the back-end systems of record.
They all need to be focused on acceleration.
At the same time, IT leaders must be prepared for
unexpected changes in the technology landscape.
Schlamowitz says, A decision you make today may not
be the right decision a year from now.
Qatar Airways: Delighting Your

Passengers and Your Employees
The marvel of flying is an exceptional example of mobile
technology which puts an airline in a good position to
realize the potential of mobile computing. Airlines dont
just transport passengers from one location to another;
they manage a ceaseless flow of workers, baggage, fuel,
and critical information.
Qatar Airways, the award-winning airline of the State
of Qatar, uses the latest in mobile technology
smartphones and tablets to change how the company
operates in the B2B, B2C, and B2E (business to
employee) areas.
The technology challenge for the airline industry is
preparing the passenger for travel through real-time,
online solutions. Passengers increasingly want to do
more of the preparation themselves, and for them to do
so, cost-effective information dissemination mechanisms must be available to them, says CIO Arasnipala
T Srinivasan, a 30-year airline technology veteran.
Mobility has finally offered that opportunity.
Qatar Airways has developed mobility solutions
across the entire spectrum of its business: apps for
empowering passengers and productivity- and
service-enhancing apps for the cabin and flight crews

and for a wide range of airport personnel and other
employees.
The term mobility was not part of the lexicon until
recently, but the basic business advantage was clear. As
the iPad and other mobile devices became more reliable
and robust over the past four years, Srinivasan says, we
realized that we could provide our mobile workforce with
a high level of information capture in real time.
Qatar Airways consumer apps have been welcomed
and used widely by passengers. The initial offering
allowed customers to view schedules, book a flight, check
in, and check flight status capabilities that are now
being further enhanced.
The airlines solutions for its mobile workforce
cabin crew and pilots consist of iPads that offer
real-time information to help employees discharge their
responsibilities more efficiently and effectively. Initially,
these efforts were focused on elevating the customer
experience something Qatar Airways was already
known for to a whole new level.
For example, when a flight is boarded and the door is
about to close, a ground operations team member
previously stepped onto the plane and handed the flight
attendant a sheet of paper listing all passengers, seat by
seat, and basic information such as special meal requests
or medical needs. Two years ago, Qatar introduced
Qruise, an app for the iPad that automatically provides
detailed passenger information to the cabin crew.
Instead of simply a name and a meal preference, the
mobile app contains a deep well of data about each
customer, especially first-class and business-class flyers,
whom the airline ensures receive unparalleled service.
Qruise is an office in the air for the cabin crew. Today,
Qatar Airways deploys around 500 iPads and iPad Minis
across its 130-aircraft fleet.
Qatar Airways is also rolling out the iPad to its 2,000
pilots, giving them a single device for all flight-related
information. The company created an app called Qloud
that will ultimately become an EFB (electronic flight bag)
approved by the FAA as an integral Class 1 flight
instrument. With it, pilots can, for example, check in for
the flight, observe schedules and weather conditions at
destination airports, meet the flights crew, and even
obtain details on hotels where they will be staying in the
cities they will be flying to.
The idea is to remove as much paper and
documentation as we can from the flight deck,
Srinivasan says, which not only leads to better decision
making for the pilots, because they have the data at home
or anywhere in the world, but also reduces weight on
flights and enables data preservation.
Airport operations have also benefited immensely
from mobility solutions. For example, Qatars dispatch
functions the so-called red caps who are accountable
for on-time departures have a prodigious task in a
fluid environment. On a given shift, a red cap is
responsible for multiple flights and must move around
the airport overseeing many activities: baggage loading
and unloading, fueling, following the status of
The idea is to remove as much paper

and documentation as we can from the
flight deck, which not only leads to better
decision making for the pilots, because
they have the data at home or anywhere
in the world, but also reduces weight on
flights and enables data preservation.
Arasnipala T Srinivasan, CIO, Qatar Airways
passengers, and staying abreast of maintenance on the
planes. In the past, this person was armed with a
walkie-talkie and loads of paper.
Today, all the information on every aspect of every
flight is updated in real time on Galaxy Tab tablets, and
the red cap receives alerts when theres a problem. Now,
its really management by exception as opposed to
management by calling and sharing and handling finite
pieces of paper that become irrelevant in five minutes
because the status has changed, Srinivasan says.
To enhance productivity and employee self-service,
Qatar Airways has developed a Corporate App Store that
allows employees to download apps onto their personal
devices. The Souq app, which provides details of
corporate discounts, is popular with employees. Apps
like Staff Check-in and MyGems allow employees to
check in seamlessly, receive corporate messages, and
view personal information while on the move.
Its critical to note that Qatar Airways is a 24/7
operation, Srinivasan says. The airlines home and hub
at Hamad International Airport is always open. This
adds a whole other dimension to our operations. The
mobile technology must be able to support this.
Though it hasnt been an easy task, he says, it has
been a huge delight making mobile technology
applications that take flight.
Walmart: An Adaptable App That

Changes with Customer Needs
Three years ago, Walmart launched a mobile app that

fundamentally changed the way the company does
business. The application looks like a typical e-commerce
app on a users smartphone most of the time.
But when a customer enters a Walmart store, the app
morphs into something very different. Using the location
of customers who activate the in-store feature, the app
provides promotions, prices, and other information
specific to the store where they are shopping for
example, the exact location of an item on the customers
shopping list or the price of the item in that particular
store.
At a time when some retail chains were blocking
customers in-store Internet access to prevent them
from pricing and checking out a physical item and then
purchasing it from an online competitor Walmarts
Store Mode encouraged people to use their phones while
roaming the aisles. Of course, the app also made it easy to
order an item at Walmart.com if it was not available in
the store.
Although in-store apps are now relatively common
among large retailers, Walmart was the first chain to roll
one out nationally.
What led to this new twist on the mobile app? And
does Walmarts approach to developing the app hold
mobility lessons for other companies, whatever the
industry?
It sounds trite, but when we think about innovation,
we truly do so with the customer in mind, says Gibu
Thomas, Senior Vice President of Mobile and Digital at
Walmart. A mobile app, he says, provides an
opportunity to get the right information to the customer
at the right time.
Indeed, Thomas says, his team saw smartphones as
having the potential to create a consistent connection
with customers. The devices could close the gaps in a
fragmented series of interactions that for the most part
had been limited to a customers engagements with
salespeople in the store and with Walmarts website
when a customer happened to be on a computer at home
or work.
The problem with the smartphone, though, was the
size of the screen, which would have to accommodate not
only the features available on the large-screen desktop
site but also additional in-store features.
As is often the case, what seemed at first like a
constraint actually presented new possibilities. We said
to ourselves, Wait a second. This actually isnt a
constraint. Or its one we can make an advantage,
because this smartphone can provide us with context on
where the customer is, Thomas explains. Instead of
providing on the screen a menu of all the features of the
app, which the customer may or may not care about, we
decided to offer a contextual experience thats tailored to
where the customer is.
The simplest way to figure out if a customer was in a
store or not was geo-fencing every one of our stores, he
says. Because of the location capability of the device, we
were able to trigger the knowledge that youre in the
store. And the app interface would automatically
transform itself to display capabilities that only matter to

you when youre there. The broader set of capabilities
that customers wouldnt care much about when they
were in the store would still be available on the app; they
just wouldnt clutter up the screen.
This move was driven by an empathetic
understanding of what kind of experience would work for
customers. What does Thomas think might have resulted
if he and his team, in developing the mobile app, had
strayed from their focus on customer needs?
They might have tried to emulate the mobile apps of
competitors, particularly pure-play e-commerce retailers
like Amazon. But that would have been a distraction
from Walmarts strategy of capitalizing on the hybrid
business opportunity that exists at the intersection of
digital and physical a strategy fully realized in the
Store Mode app.
Or they might have tried to pursue the amazing
marketing opportunity that connected customers
represent by sending lots of messages. But bombarding
customers with messages in the hope that they will buy
more isnt going to work, because customers are smart
and they have alternatives, Thomas says.
They might even have tried to do right by the
customer, offering the full array of capabilities that the
smartphone enabled. We could have said, Whether the
customer is in the store or not, we want to give him
access to all of these capabilities. So lets jam the screen
with as many small buttons as possible. But customers
would end up so confused and overwhelmed that they
wouldnt use the app. Or theyd see a capability on their
screen say, the Scan & Go feature, which allows them
Instead of providing on the screen a

menu of all the features of the app,
which the customer may or may not
care about, we decided to offer a
contextual experience thats tailored
to where the customer is.
Gibu Thomas, Senior Vice President of
Mobile and Digital, Walmart
to scan their items with their phone as they shop and

then breeze through checkout wonder what it was, try
it at home, and then say, Why did you show me this if Im
not in a store?
This empathy for what a customer feels and
experiences has resulted in a wildly successful app, one
that offers not just convenience but engagement.
Walmart doesnt give exact figures, but reports are
that millions of people have downloaded the app. More
than 50% of traffic to Walmart.com now comes from
mobile devices. Nearly 85% of smartphone users about
half of Walmart customers in the U.S. and the U.K. own a
smartphone use their phone while shopping in a store.
According to Walmarts own internal research,
customers with the app make up to two more shopping
trips to Walmart stores and spend nearly 40% more each
month an indication that keeping the focus on
customers whether they be Walmarts shoppers or the
employee users of mobile devices in your organization
is key to the success of a mobility initiative.
Socit de transport de Montral:

Turning Mobility into Revenue
Public transit, so often ridiculed and scorned by harried
passengers, may seem to be an unlikely source of digital
innovation. But the Montreal transit system Socit de
transport de Montral, or STM is leveraging mobile
computing and the systems vast customer base to
generate significant new streams of revenue.
STM is the fourth largest public transportation
system in North America, with 1.5 million daily riders,
who account for more than 400 million trips per year on
the citys 250 bus lines and through its 68 subway
stations. Fully 65% of the residents of this cosmopolitan,
dual-language city are regular riders who have embraced
the clean and efficient system as a preferred method of
transportation.
To increase ridership and offset the 13% who
abandon the system each year because they move away,
change jobs, or die, STM focuses not only on improving
service but also on enhancing the customer experience in
innovative ways. As part of that effort, STM has offered
mobile solutions to its customers for more than five
years, starting with notifications of bus and subway
delays on riders mobile devices.
But recently, STM decided to get serious about
mobility and launched an ambitious loyalty program for
its riders using mobile technology developed with SAP.
Unveiled in late 2013, the Merci ( Thank You) program is
the first such rewards program offered by a public transit
system, and it is already paying big dividends.
Merci is a mobile app that provides STM riders with
not only a steady flow of information but also special
offers from local retailers and event venues. The
information is pumped out to iPhones, iPads, and
Android devices in real time and is geo-located so that it
is targeted at individuals on the basis of their current
location.
We send you things that are extremely relevant to

you because weve asked you what you like, says Pierre
Bourbonniere, STMs chief marketing officer. We send
you things that are relevant to you based on where you
are located. If you are at the corner of Mount Royal and
Ste. Catherine streets, we will send offers from the local
shops, restaurants, bars, and events that are happening
now, today.
This loyalty program doesnt give points, he adds.
It is based on instant gratification.
The program also takes into account frequency of
use, so the most loyal and high-usage customers are
offered better deals, such as free tickets to an opera or
ballet, while those who use the system less often might be
offered a 50% discount.
STM views the Merci program as a major success,
with more than 50% of Opus card holders signing up.
The program has had a positive effect on their behavior.
According to Bourbonniere, 24% of riders using Merci
increased their use of public transit; 57% discovered new
destinations by public transit, either shopping or event
related; 43% are using public transit for new reasons,
other than, say, getting to work or school; and 47% are
taking a friend along.
But the Merci program has done more than
strengthen customer loyalty. It has also proven to be a
potent source of non-fare revenue for STM. Partners in
the program provide the rewards at no charge to STM.
Indeed, they pay an entry fee to be part of the program
and additional fees for usage. Bourbonniere estimates
that the program will generate $15 million in revenue for
STM over its first three years and then blossom into an
annual $50 million bonanza after that.
So what can we learn from the experiences of these

companies? How can mobility one of the quartet
of concepts that comprise the SMAC stack
(Social, Mobility, Analytics, Cloud) and a
front-of-mind area of interest for CIOs actually
create value for companies?
A few themes emerge from these stories:
Mobility has the potential to transform and
streamline existing business practices, such as
account management, sales, and marketing,
leading not only to significant productivity gains
but also increased revenue streams. In fact,
mobility initiatives themselves can become
lucrative sources of revenue.
Mobility initiatives require forward momentum
in order to bring the organization along.
Coordinated pilot programs can help ensure the
rapid and successful rollout of such initiatives.
Corporate-wide mobility governance teams,
overseen by IT but including business unit
representatives, can smooth the path for
enterprise mobility initiatives.
Although BYOD is a much-cited element of
enterprise mobility, CIOs neednt officially
sanction BYOD in order to implement successful
mobility initiatives.
Security remains perhaps the most significant
challenge for CIOs seeking to embrace enterprise
mobility.
Although there are no fool-proof prescriptions
here, heeding the lessons these companies offer
may make a difference for an organization trying to
make enterprise mobility a reality.
If you are at the corner of Mount

Royal and Ste. Catherine streets, we
will send offers from the local
shops, restaurants, bars, and events
that are happening now, today.
Pierre Bourbonniere, Chief Marketing Officer,
STM
HIGHLIGHTS FROM ISSUE NUMBER 4
7 Things CIOs Are

Doing to Get Ahead in the DIGITAL ECONOMY
PLUS:
Experience Talks | The End of IT Innovation | The CIOs Choice | Other Voices
ALSO IN THE ISSUE:
Straight Talking:
Actionable insights from CIOs of Consumers Energy, Covance, SAP Americas, Vanguard Health
Systems, and other forward-looking companies
View from the Technology Blogosphere:

Robert Scoble on The Age of Context
Points of View:
New-Age Outsourcing: Five outsourcing advisors describe emerging models
Go to: magazine.straighttalkonline.com/issue4
www.straigthttalkonline.com
Issue Number
Straight Talking
The Colorado State Capitol, located in Denver, was constructed in the 1890s from Colorado white granite, with a
gold-plated dome that commemorates the Colorado Gold Rush of 1859. Today, the state is a growing center for
high-technology companies.
Issue Number 5
The ROI of Hard Work
Successfully tackling an IT problem of enormous complexity on a

massive scale isnt easy but can yield tremendous benefits in
this case, making a difference in the lives of hundreds of thousands
of Colorado citizens.
POSITION: Former Secretary of Technology and Chief Information
Officer
COMPANY: State of Colorado
WORKS FROM: Denver, Colorado
Kristin D. Russell
PROFESSIONAL BACKGROUND: In February 2011, Kristin

Russell was appointed by Colorado Governor Hickenlooper to
serve as the states Secretary of Technology and Chief
Information Officer. In those roles, which she held until May
2014, she led IT economic development for the state, promoted
Colorado as a location for technology companies, and oversaw
all information systems statewide. Prior to joining the
Governors Office, Russell was the Vice President of Global IT
Service Operations at Oracle, where she was responsible for all
data centers and computing operations worldwide. She also
served as the Vice President of Global IT Operations for Sun
Microsystems, where she led the team that provisioned IT
solutions and services to Suns extended enterprise, supporting
more than 40,000 Sun employees and partners around the
globe. Russell has also held roles in customer management,
statistical process control analysis, and training and
development at Citigroup and Southern Pacific Transportation
Lines. She was named the public sector and nonprofit CIO of the
year in 2013 by the Denver Business Journal and a Top 10
Breakaway Leader by the Global CIO Executive Summit. In June
2014, Russell became a Director with Deloitte Consulting.
EDUCATION: BA, University of Colorado; Colorado Executive
Development in Residence program
PERSONAL PASSIONS: Family, fitness, and food
Recently, I decided to leave my job as Secretary of

Technology and Chief Information Officer for the
Colorado Governors Office of Information Technology
to join Deloitte Consulting. While most people dont
question my return to the private sector, I do get asked
quite frequently why I ever decided to leave a successful
career in the private sector to work in the public sector in
the first place.
The truth is that I certainly wasnt looking to make
that move when I got the call from Colorado Governor
John Hickenloopers transition team, in early 2011. I was
on my way back from Tokyo when a fellow tech leader
who was helping the Governor recruit the states new
dual CIO and Secretary of Technology called me. He told
me about the position I would be responsible for all the
technology systems across the executive branch. I would
be on the Governors cabinet, and I would lead the states
IT economic development strategy. I would be known as
Madame Secretary.
I politely told him, I dont do public sector, I dont
know what a cabinet is, I dont want to be a secretary, and
I never want to be called madame!
I have to admit, however, that I was intrigued. Like
many of you, I had heard the stories about government
waste, bureaucracy, and politics, not to mention the
significant pay cut. Still, I thought Id go ahead and meet
with the Governor and his team to hear what they had to
say. After that, my plan was to shut them down.
Governor Hickenloopers first question was, Why do
you want this job? Knowing that I didnt, I turned the
question around and asked him, Governor, if you were
me, why would you consider this job?
Colorado Gov. John Hickenlooper convinced...
...Kristin Russell to do a stint in public service, as head of

the Office of Information Technology, where her...
...first big challenge was sorting out the problems of the

Colorado Benefits Management System.
I thought Id go ahead and meet with

the Governor and his team to hear
what they had to say. After that, my
plan was to shut them down.
He leaned across the desk and said, Its about

meaningful work. He pulled out a collection of poems
and began to read To Be of Use by Marge Piercy. {See
the sidebar}
It moved me. I thought about what it would be like to
do really meaningful work. I suddenly went from Why
would I want to take this job? to How can I not?
Whether at Oracle or Sun Microsystems or Citigroup,
Ive taken jobs for three reasons: to work with great
people, to learn, and to help.
Becoming the CIO of the state of Colorado met all
three criteria in a big way.
Fixing the Broken Pieces

In a public-sector role, youre in the spotlight. You
typically have two phones, one for personal use and the
other for work, your e-mail is subject to open review by
anyone upon request, and your every move is publicly
scrutinized. In a private company, you go in for a
performance review in front of your peers and your boss.
Here, you sit before a legislative committee and
everything you say is streamed to millions of people.
Its an adjustment and one that began right away
for me. Within five minutes of the announcement of my
appointment, I got a call from a reporter at the Denver
Post. He had been covering the problems plaguing the
Colorado Benefits Management System, or CBMS, for
more than seven years. The first words out of his mouth
were, How are you going to fix it?
It was a huge problem. Back in 2004, state leaders
wanted to consolidate the multiple systems supporting
state benefits and welfare programs into one massive
system in order to help citizens quickly and easily
determine their eligibility for more than 100 programs. It
was a great idea aimed at helping the states most
vulnerable population. But the project was doomed from
the start. It didnt receive adequate funding. Four
pilot counties deemed the new system unworkable. Yet it

went live anyway.
CBMSs troubles continued, and the state was forced
to pay millions of dollars in sanctions to the federal
government for food stamp overpayments. In 2010, just
six months before I joined, the system collapsed under
increased loads because of the recession and was down
for 15 hours in a single month. Inside the government,
CBMS was known as C and B, Our Mess. A federal audit
of the system in 2011 cited serious problems that could
have resulted in a loss of federal funding. Numerous legal
cases had been brought against state agencies, and
Colorado settled a lawsuit brought by an advocacy group
over benefit delays and wrongful denials of benefits that
affected nearly one quarter of a million enrollees. The
system was a matter of life and death for many Colorado
residents.
I knew I could be of use. I wanted to make sure that
CBMS was no longer a four-letter word. But, as Marge
Piercys poem had said, that meant I had to strain in the
mud and the muck to move things forward, to do what
has to be done, again and again.
Technology Problems Are People Problems

The first committee meeting I attended was hostile.
There had been a series of promises and attempts under
two separate administrations to fix CBMS, but nothing
had worked. People told me nothing ever would.
I went out to several counties myself and sat down
with people to understand their experiences. They would
hit a button and go to lunch, hoping the system would be
working by the time they got back. I hired a CTO, also
from the private sector, to take a deep dive into the
Its easy when there are problems

with big IT projects in the public
sector to point the finger at the
vendor. We didnt do that.
bottlenecks. There was also no governance around the
system. The agencies, departments, and counties that
used it were fighting.
I always say, Technology is simple. People are hard.
My job was to demonstrate that we understood what the
problem was and that we could fix it.
We needed to bring everyone to the table to make the
tough decisions about what we were going to do. We
created an executive steering committee for CBMS,
which was made up of the Executive Directors of the
agencies, representatives from the Governors Office,
county leaders, and me. We set up structured processes
for how often we would meet and how we would make
decisions. We drew pictures to show everyone exactly
why the system wasnt working and what we could do
about it. The joint budget committee stuck its neck out to
give us funding. And we created our first 18-month plan,
focused largely on turning around the failed system. We
set up data and metrics of what success would look like.
Every quarter we reported back on what we had
accomplished and what our next steps would be.
The Benefits of a Dual CIO Role

Increasingly, companies recognize the value that a CIO can
bring beyond delivering and managing enterprise systems.
Some take on additional responsibilities in, for example, HR,
digital marketing, operations, or strategy.
In the state of Colorado, I wasnt just the CIO. I was also
the Secretary of Technology. Governor Hickenlooper clearly
sees technology as a huge driver of economic growth, today
and in the future, for the state of Colorado. Were creating a
public-private ecosystem that enables entrepreneurship and
innovation to grow naturally. Our goal is to change how the
state looks at itself and how technology companies and
professionals look at the state.
As the CIO, its a natural fit. A few years ago, I started the
IT Economic Development advisory council, which has
executive members from across Colorados technology
community. We discuss what its like to manage a technology
organization in Colorado and what we are doing to improve
Colorado as a place to do business.
We also reach out to Colorados technology companies to
thank them for their business and commitment to the state.
Colorados a great place to attract talent. It draws in people
because of its natural beauty, entrepreneurial spirit, and

business-friendly climate. We like to say that Colorado is a
place where you can live, work, and play. Politically speaking,
were a third Independent, a third Democrat, and a third
Republican. That requires a collaborative environment that
translates to trust and stability for businesses long term.
Weve had more than 17,000 new tech job
announcements since we started. Were doing amazingly
well with the start-up community by bolstering our
epicenters for entrepreneurship. Boulder has the most
start-ups per capita of any city in the country, according to a
study by the Kauffman Foundation and the Engine research
group, with Fort Collins-Loveland in second position, Denver
sixth, and Colorado Springs ninth.
As much as my CIO role fueled my position as Secretary
of Technology, the benefits also flowed the other way. As a
result of being out among leading technology companies, I
was very aware of what was going on and what cool new
projects and solutions were coming to market. That kept my
eyes open as I helped shape the technology strategy for the
state.
Colorado Governor John Hickenloopers efforts

to convince Kristin Russell to be the states
Secretary of Technology and Chief Information
Officer included reading her this poem.
we had accomplished and what our next steps would be.

Its easy when there are problems with big IT projects
in the public sector to point the finger at the vendor. We
didnt do that. Instead we worked closely with people at
the vendor to restructure the relationship, to give them
more accountability and a stake in the outcome. I think it
helped that I came from the private sector and could
understand their frustration about not being able to talk
with people who understood what they were trying to do.
Things started to turn around.
It was a lot of listening, communicating, setting
expectations, being transparent, and following through.
Its basic stuff, but sometimes it doesnt happen.
To Be of Use
A Foundation for the Future
By Marge Piercy
By the time I left, we were meeting standard timelines to

determine benefits eligibility approximately 90% of the
time. More than 95% of CBMS transactions were
happening in less than four seconds; our original goal
was 80%. We also reduced help desk tickets by 35% and
improved system performance by 30%.
Those are great numbers. But the thing that made us
most proud was seeing the actual results the residents
of Colorado getting the benefits they so desperately
needed.
The people I love the best

jump into work head first
without dallying in the shallows
and swim off with sure strokes almost out of sight.
They seem to become natives of that element,
the black sleek heads of seals
bouncing like half-submerged balls.
I love people who harness themselves, an ox to a
heavy cart,
who pull like water buffalo, with massive patience,
who strain in the mud and the muck to move things
forward,
who do what has to be done, again and again.
I want to be with people who submerge
in the task, who go into the fields to harvest
and work in a row and pass the bags along,
who stand in the line and haul in their places,
who are not parlor generals and field deserters
but move in a common rhythm
when the food must come in or the fire be put out.
The work of the world is common as mud.
Botched, it smears the hands, crumbles to dust.
But the thing worth doing well done
has a shape that satisfies, clean and evident.
Greek amphoras for wine or oil,
Hopi vases that held corn, are put in museums
but you know they were made to be used.
The pitcher cries for water to carry
and a person for work that is real.
It was a lot of listening,

communicating, setting expectations,
being transparent, and following
through. Its basic stuff, but
sometimes it doesnt happen.
And the CBMS project created a solid foundation,
both from a technology and a governance point of view.
We took the governance structure created for this project
and expanded it for use with all major IT projects, and we
moved on to our next 18-month plan. The first plan
focused 85% of our investment on fixing what was
broken. In our most recent budget request, we inverted
that: 88% of the budget is for new projects, such as
PEAK, an online portal that enables Coloradans to apply,
update, and check on the status of any type of benefit
online, with anytime, anywhere, any-device access.
Colorado also was one of a handful of states that
successfully implemented the Affordable Care Act on
time and without a hitch. The work we did with CBMS
ensured our success in this historic effort.
Every time I take a job, I have a 90-day plan. I write

an epitaph for what I want to have accomplished when I
leave. In my Colorado position, I wanted to create an IT
organization that the state could be proud of, that would
deliver critical services to the citizens of Colorado. Ive
done lots of systems implementations big, important
enterprise systems for huge companies. But Id never
done anything like this. Yes, it was truly meaningful
work.
The Takeaways
Public-sector roles can be uniquely
challenging: As a public official, your
every move is scrutinized, your
performance reviews might take
place before a legislative committee,
and you are apt to inherit and be
expected to solve high-profile
messes.
Technology is simple. People are hard.
Solving problems that affect hundreds
of thousands of citizens requires
listening to their needs and to the
experiences of the people trying to
implement the technology, and then
instituting a rigorous process for
tackling the issue and defining
success.
Its easy when there are problems with
big public-sector IT projects to point
the finger at the vendor. Its more
helpful to work closely with people at
the vendor to restructure the
relationship, to give them more
accountability and a stake in the
outcome.
The ROI
Under Russells leadership, the State of Colorados
Office of Information Technology
Upgraded and transformed the Colorado Benets
Management System into a reliable and trustworthy
system
Consolidated more than 15 disparate e-mail
systems into a single, cloud-based collaboration
system for the entire executive branch
Took the lead in the nations rst multi-state
cloud-based unemployment insurance solution
(WYCAN)
Launched the Colorado Information Marketplace
the states first open, data sharing marketplace
promoting government transparency, economic
development, business intelligence, and analytics
Began modernizing a 23-year-old nancial and
accounting system that handles in excess of $35
billion in annual expenditures and revenue
Straight Talking
AARP (formerly the American Association for Retired Persons) is a U.S.based nonprofit, nonpartisan
organization with more than 37 million members devoted to improving the lives of people over the age of
50. AARPs TEK (technology, education, and knowledge) events, like the one pictured here, offer free,
user-friendly training to older individuals who want to enrich their lives through new technologies.
Running IT Like a Business . . .

at a Giant Nonprofit
When it comes to ITs potential, a nonprofit organization is no
different from a business. At AARP, IT employees turned
themselves from technologists into strategic leaders, transforming
their department into a source of value for AARP members.
POSITION: Executive Vice President and Chief Information Officer

COMPANY: AARP
WORKS FROM: Washington, DC
PROFESSIONAL BACKGROUND: Terry Bradwell, the Executive
Vice President and Chief Information Officer at AARP, is
responsible for managing a $100 million annual budget that
supports all AARP stakeholders, including members,
volunteers, advocates, donors, external business partners,
and internal staff. He previously served as AARPs Vice
President of Application Services Management. Prior to
joining AARP, Bradwell was a principal for IBMs Media and
Entertainment practice, with a primary focus on turning
around troubled IT projects and corporate change
management initiatives. While at IBM, he successfully led the
turnaround efforts of AARPs first integrated membership
management system (Konnex) and established the framework
for AARPs Chief Information Officer role.
EDUCATION: BS, Florida A&M University
Hollis Terry Bradwell III
PERSONAL PASSIONS : Family time, travel, playing piano
TBradwell@aarp.org
Many people assume that nonprofit organizations like

AARP dont have to run like a business. But even though
the focus of a nonprofit is the social mission, youre still
in the business of delivering on the aspects of that
mission. There are operations to run, services to deliver,
customers to satisfy, a bottom line to meet. Youre in the
business of doing good, but its
still a business.
And at AARP, its a
multifaceted business. Our
mission is to equip Americans to
age with dignity and purpose.
That covers a broad spectrum of
services
health
care,
entertainment,
employment,
long-term care, technology. We
tackle each of those and more,
and that makes us a very large
and very complex business.
Ive been with AARP since I
fell in love with its mission 12
years ago. But when I became
CIO, in 2011, I saw the
opportunity to turn around the
technology organization. The IT
department had been very tactical in its approach,
delivering systems as needed with no real long-term
strategy. Our infrastructure had grown organically over
the years. And while organic growth works, its not
efficient, and its very costly.
I want IT to run and think like a business. We
run operations. We have customers. We provide services.
We have a bottom line. You might think we dont have
competition. But we have that, too. If were not quick or
agile enough, our customers will turn elsewhere for their
IT needs. Were no different than any other company. I
wanted to provide more value to AARP and become
much more efficient in delivering our products and
services to the organization.
our leadership team to make sure we all embraced

common values and beliefs from a business and
technology perspective. Some of my team came through
that process, and others did not. It had nothing to do
with their capabilities or skills. Where we were trying to
go strategically just wasnt the right cultural fit for
everyone.
Although it wasnt easy, it
helped facilitate some of the
other transformational changes
we needed to make. Once you
set a new course with the right
leadership, it propagates to the
rest of the staff. Change is still
hard, but you have a coalition
of the willing working on
creating the right strategy for
technology, figuring out the
best processes, and aligning
with the business.
My direct reports and I
became less like technologists
and more like leaders of what is
essentially a $150 million
business. Technology is what
we do, but its not who we are. We are like a start-up with
customers to serve, partners to integrate, and services
that need to be relevant to our customers. And since
were now running IT like a business, we need some of
the same non-tech skills any company does. For
example, I hired a marketing and PR professional. It is a
thankless job. We rarely get attention unless something
goes wrong. So our IT marketing manager finds
opportunities to promote ITs value.
AARP TEK is one of the

most exciting programs
to come out of AARP in
recent years. And it
came from IT.
People First
Whenever you make significant change in a technology
organization, you have to consider people, process, and
technology. A lot of IT leaders start with process. But I
always start with people. People are your most valuable
assets. Nothing happens without them. I can say that I
want to run IT like a business until Im blue in the face,
but its not going to happen until I have these folks on
board and a new culture embedded in the organization.
I began this transformation with my leadership team.
I needed to make sure we were all on the same page.
Then we could set the right tone with the rest of the
organization.
But thats not as simple as it sounds. We have always
had a lot of great people in this organization. But when
youve been doing the same things the same way for
many years, you get comfortable with it. When you try to
change that, its difficult. The default may be to push
back or stand still. We spent a lot of time working with
Strategic Sourcing
Once we had the people in place, we made an assessment
of all our technology and services to determine which
were providing value and which were not. It was a long,
hard look at our own environment. We uncovered areas
that were working where we could double down and
deliver more. We discovered opportunities to tackle
issues that customers had been unhappy with for years.
Over the past three years, weve decoupled more than a
decades worth of systems and processes that we had
amassed and, in many cases, replaced them with new
technology and processes that are more suited for our
long-term strategy.
We have taken a similar approach to our outsourcing
portfolio. We had been doing quite a bit of outsourcing.
But just as our technology infrastructure grew
organically over the years, so did our outsourcing. There
was no long-term focus.
We took a step back and created an outsourcing
strategy. We narrowed our partners down from more
than 30 IT suppliers to just a handful of service providers
that could do meaningful and purposeful work for us, not
just handle our spot needs. We get to leverage their
mature processes and the investments theyve made.

And, as a result, our service delivery improves and our
costs go down.
As a result of that shift in sourcing strategy, the skill
sets we need have changed. We no longer need to have
capabilities like development and systems support
in-house, but we do need experienced vendor managers
and business solution architects.
Today, we have four primary partners: HCL for
application support services, IBM for ERP maintenance,
CSC for cloud computing, and Ciber for project
management and analytics. Its all work that we could
certainly do for ourselves. But if we did, it would mean
spending 80% of our time supporting day-to-day
operations and only 20% planning for the future. I
wanted to flip that. Our partners are doing very
important work that we couldnt afford to provide. And I
can take the money that I save and invest it in even
higher value work. We can spend our time working
closely with the business to plan for the future.
IT Takes Center Stage

Having those partners to rely on has freed up our IT
organization to identify areas of the business where we
can bring new and innovative services to the table in
order to enhance the value of AARPs mission in ways
that even the business hadnt considered before.
In the past, we were viewed by the rest of the
organization as strictly an operational group behind the
scenes. But I want IT up on that stage. We can deliver
more value than just CRM or ERP or ECM. We can
deliver value to our membership at large.

A great example of that is our AARP TEK Pavilion
initiative. TEK stands for technology, education, and
knowledge, and the program offers free, hands-on
training to seniors who want to learn how to use
consumer electronics, computers, and social media to
enrich their lives.
Today, 20% of Americans have yet to get online
and half of those folks are age 65 or older. Yet being
online is an imperative in the 21st century, whether
youre trying to rent a movie or do your banking. We saw
an opportunity within IT to create a program to educate
our members about technology. We worked with our
major vendors, including Microsoft and AT&T, to
provide us with sponsorships, equipment, and
storefronts for the nationwide program that we are
launching in 60 markets this year.
The program has elevated ITs status and gotten us
out of the back room as weve engaged with every major
function within the organization, from marketing to
membership, to get the AARP TEK program off the
ground. Its one of the most exciting programs to come
out of AARP in recent years. And it came from IT.
Now that weve done a lot of the heavy lifting
regarding the IT transformation, the goal is to make sure
that what we do has business impact, whether its new
capabilities were rolling out like single sign-on or the
effort were making to provide 100% systems access via
mobile devices.
Weve set the stage. All the players are here. The
curtains are open. Its show time.
The Takeaways
Running IT like a business, instead of a
support function, requires a shift in
mind-set: IT has customers and a bottom
line. It also has competition. To remain
relevant to customers, IT needs some of the
same non-tech skills any company does,
such as PR and marketing professionals
who can find opportunities to promote ITs
value.
Any leader transforming a technology
organization must consider people,
process, and technology. A lot of IT leaders
start with process. But no new process will

be effective unless the people are all on the
same page.
Left to develop organically, an outsourcing
portfolio may lack a long-term focus.
Instead of turning to outsourcing partners
on an ad hoc basis, as needs arise,
companies should be thinking in terms of an
outsourcing strategy, choosing partners
with processes and skill sets that can
support strategic goals.
Straight Talking
Headquartered in North Sydney, Australia, WorleyParsons is a global provider of professional services to the
resources and energy sectors, including the design, engineering, and operation of offshore oil and gas production
platforms, such as the Bayu Undan facility in the Timor Sea (pictured here). The company has 166 offices in 43
countries.
Seven Habits of the

Highly Successful CIO
Being a CIO today requires a whole new set of skills and traits. Heres a
starter list from a CIO with an unusual perspective on the job.
POSITION: Chief Information Officer and Director of Procurement
COMPANY: WorleyParsons
WORKS FROM: Perth, Australia
PROFESSIONAL BACKGROUND: Brian Adams is in his eighth
year with WorleyParsons, where he is the Global CIO and
Director of Procurement. Previously, he was the CFO for
Australia and New Zealand, having joined the company as the
Director of Strategy and Development for that region. Adams
has spent over 20 years in senior international roles with
well-known companies, such as Caterpillar and Ernst & Young.
His career spans Australia, Africa, Asia, and Europe. Adams is a
Fellow of the Council of Guildford Grammar School and is a
graduate of the Australian Institute of Company Directors.
PERSONAL PASSIONS: Snow skiing, saltwater fishing,
motorcycles (he once rode a British Royal Enfield, made in
India, back to England from a work assignment in Calcutta),
raising money for Future Hope (www.futurehope.net)
Brian Adams
Brian.Adams@WorleyParsons.com
A wise man once said to me, Brian, there are only two
types of people in the world: the maintainers and the
changers. Ive always chosen to be a changer.
Most of my career steps have reflected my desire to
round out gaps in functional and operational expertise.
Ive had marketing, services, manufacturing, and finance
roles. Ive worked at companies ranging from Caterpillar
to a mining consultancy to Ernst & Young.
But when I talk about myself as a changer, I dont just
mean in my career moves. Ive also actively sought roles
that provide fantastic change management challenges.
When I joined WorleyParsons eight years ago, I first
managed strategy and development for the Australia and
New Zealand region and then I led the regional finance
group as the regional CFO.
In that position, I was forever poking sharp sticks at
the IT function, not because they werent doing a good
job, but because they were not
engaged with the business.
They were like maintainers. If
theres one thing that has
become apparent to me from
my years outside IT looking in,
it is that IT must be an
organization of changers. The
enterprise of the 21st century
an era that is (as they say in
the military) VUCA: volatile,
uncertain,
changing,
and
ambiguous requires an
innovative,
strategic,
and
business-aligned IT function.
Our CEO at the time agreed.
And he turned me from
poacher into gamekeeper,
giving me my first CIO role.
I believe this varied
background provides me with an interesting perspective
on the capabilities that a CIO needs in order to succeed in
this new world. We are at a tipping point, and the
traditional CIO has to change to meet the demands of the
business. If that doesnt happen, theres going to be a lot
of turnover in the position. As Ive settled in to this latest
leadership challenge, Ive put together a list of the skills
and traits I believe are critical for CIOs leading IT
organizations today.
is a great idea. In fact, such rotations are a great idea for

employees in any central business-enabling function,
whether IT or finance or HR. In reality, however, it can
be difficult to implement. Taking a purely technical
professional and finding him or her a role in finance or
HR or procurement or manufacturing might not work.
Once you get to the more senior levels of the IT
organization, its a bit easier.
But a few progressive companies, like my former
employer, Caterpillar, are showing how this can work.
They do a fantastic job of moving people throughout
various functions so that when they get to the executive
level they understand how all the parts come together.
Thats what a CEO wants in a CIO. Thats what a CEO
wants in any strategic executive. If youre too
functionally specific, you wont last long. A CIO whos
spent 20 years in IT probably isnt capable of having a
conversation about anything
other than IT.
If theres one thing that

has become apparent to
me from my years outside
IT looking in, it is that IT
must be an organization of
changers.
1. Take a Walk on the Non-IT Side

Ive had a long career outside the walls of IT, which has
proven invaluable in my current CIO role. All too often, a
CIO will have worked his or her way to the top of what
was traditionally a technical function, without a
well-rounded knowledge of the business and with little
ability to comprehend the complexity of how an
organization works. I believe that any IT leader who can
spend significant time in non-technology roles will
benefit.
Giving promising IT folks the opportunity to rotate in
and out of IT to instill that understanding of the business
2. Be Business Curious
A CIO whos a changer, not a

maintainer,
needs
the
intellectual curiosity that leads
him or her to question how the
business works. He or she needs
the desire to understand what
makes the business tick even
more than what makes IT tick.
Where is the money made?
Where is the money lost? Where
are sales made? Where are sales
lost? What makes employees
more productive? What makes
employees less productive?
Those are the questions that
should be top-of-mind not, how do I optimize my
storage?
I meet CIOs who get turned on by technology but not
by the business. That doesnt work if you want to be a
business-aligned CIO.
3. Speak English
Traditionally, the successful CIO was a technical expert. I
am not. And I am happy to raise my hand and say, I have
no idea what that means. Can you explain it to me in
laymans terms? There is no greater Jedi mind trick for
making someone fall asleep than to talk about servers,
storage, or God forbid network uptime. Unless you
can translate the tech speak into the language of the
business, being a technical expert can be a hindrance to a
CIO today. Yes, you need a fundamental understanding
of technology so some IT guy or vendor doesnt pull the
wool over your eyes. But a successful CIO will talk in
terms of what IT can do for the business to enable it or
differentiate it or come up with differentiated product
solutions. Companies today dont need a CIO whos a
chief infrastructure officer. They need a CIO whos a chief
innovation officer. They dont care how youre going to

configure your servers to optimize your networks. They
care about your ability to bring about change.
4. Have the Courage of Your Convictions

There are still plenty of organizations that assume a CIO
or IT manager ought to just do what he or she is told to
do. But the new CIO must resist being put inside that
order-taking box. It takes a fairly strong character to
confront and overcome some of the pushback you get
from the business without alienating them. Its
absolutely necessary.
When banks asked customers if theyd like ATMs,
they said, Hell no! When Apple asked customers if
theyd like an iPad-sized tablet, they couldnt see the
value in it. But banks built the ATMs. Apple developed
the iPad. And the rest is history.
A CIO needs to do that sometimes push past
resistance to introduce systems or processes that they are
convinced will have value to the business. I recently
introduced a new communication and collaboration
platform. When I talked to people about it, their eyes
glazed over. They didnt want an internal social network.
But we pushed ahead, and now its widely used, creating
fantastic value for the business.
All too often, a CIO will have

worked his or her way to the top
of what was traditionally a
technical function, without a
well-rounded knowledge of the
business and with little ability to
comprehend the complexity of
how an organization works. I
believe that any IT leader who
can spend significant time in
non-technology roles will
benefit.
5. Learn Your Financial ABCs

Traits like the desire to understand how the business
works or to stand up for the value of IT may be somewhat
innate. You either have them or you dont. There are
other equally valuable skills that take a bit more effort to
acquire. Having a solid financial understanding falls into
the latter category.
You must be able to create a compelling business case
for anything you want to do. Modern CIOs have to be
commercially savvy about return on investment or they
will continue to struggle to convey the value of
technology. If you arent commercially and financially
savvy, IT will never be considered a strategic
differentiator in the business. It will be thought of as just
another budget item to manage.
6. Get to Know the Other Functions

Clearly, its important to build strong relationships with
the CEO and COO, whose support you will need for your
initiatives. But its also critical to have good relationships
with all corporate functions. Going beyond just
delivering what the function traditionally wants is what
we all need to aim for. When talking to Finance, dont
just think of the systems that you need to deliver for
accountants; think of how you can help Finance provide
valuable commercial insight that will help the business
make better decisions. When talking to HR, dont just
think of the traditional systems of compensation and
benefits; think of what you can do as CIO to make
employees not only more productive but happier in
carrying out their work, thereby helping recruitment and

retention. When talking to the CMO, help him or her
figure out how to gain access to new markets and
demographics using social tools, instead of just
supporting the corporate web site.
7. Think Strategy First

Many CIOs and IT leaders are smart tactical problem
solvers. But a CIO today needs to be capable of having a
high-level, strategic conversation about where the
company is going. It makes sense for a CIO to be part of
the CEOs strategic growth team. After all, in todays
digital enterprises, there is a strategy piece in everything
that IT does. Technology is a critical component to the
long-term strategy of the organization.
Many CIOs cant have that conversation; theyre not
even invited to that conversation. Theyre incapable of
discussing how to raise market share or how to adjust
pricing strategies or how to target a new market. A recent
survey by Harvard Business Review and Dell found that
75% of CEOs think strategic CIO involvement is key to
business success and that companies in which the CEO
and the CIO are aligned outperform organizations
lacking that alignment by a 2:1 differential.
This research indicates that less than a third of CEOs
think their CIOs are above average. And of that group,
only 40% think their CIO is knowledgeable enough about
the business to provide true strategic differentiation.

(http://innovatebusinessit.com/research-what-does-th
e-c-suite-think-about-your-future/)
Todays CIOs must bring value to the strategy
discussion and align ITs budget and strategy to the
business strategy. They must be comfortable
approaching the CMO to talk about how IT can help
target a new demographic, perhaps sparking a whole
series of conversations around apps, social media, digital
advertising, and all of those things that the CIO would
otherwise never be party to. CIOs who ask the right
questions get engaged in more value-adding
conversations with the business.
***
Get to know your peers on the business side. Learn how

to think and talk as they do. If possible, become one of
them for a while. Understand how what you do fits into
the organizations overall business strategy.
At the same time, know that you are the technology
expert. Dont be afraid to champion a great idea that may
not initially make sense to them.
Your adoption of behaviors such as these will help the
IT function become something much more than a cost
center and help you become a key member of the
CEOs decision-making team.
The Takeaways
CIOs today need to be changers rather
than maintainers. They need to engage
with the business, participate in the
high-level strategic conversation about
where the company is going, and then help
the company get there.
A CIO who has spent 20 years in IT probably
wont be able to play a broader strategic
role. Its imperative to spend time in a
variety of non-technical roles, to be curious
about
what makes the business tick, and to know

how to talk about technology in laymans
terms to other functional executives.
Plenty of organizations still assume that the
CIO is the person who takes technology
orders. But to align IT with the business,
the CIO must resist that role and be
prepared to make a business case for
technologies whose strategic value the
non-tech people dont yet understand.
Straight Talking
UPM, a global bio and forest products company based in Helsinki, focuses on creating value from renewable and
recyclable materials. UPMs wood-based biofuel is compatible with all diesel engines, meets EU and U.S. diesel
standards, and can be distributed through existing gas stations.
Seven Essentials of the Highly

Successful IT Function
Creating and running an effective IT organization is no easy task.
Here are some principles that go beyond the well-worn prescriptions
for success and offer new ways to think about this critical leadership
challenge.
POSITION: Chief Information Officer
COMPANY: UPM
WORKS FROM: Helsinki
PROFESSIONAL BACKGROUND: Turkka Keskinen has been the
CIO of UPM since October 2008. He has held a variety of roles
during his long career with the company, most of them in
finance and control. Before becoming CIO, Keskinen was a
Senior Vice President for Financial Services and Business
Control. In that position, he transformed Finance and Control
from a function based in the business units to a global function.
He also served as controller and as a member of a divisional
management team, and from 1999 to 2002 he led a global SAP
program for UPM. In 2010 he was recognized as the IT People
Director of the year in Finland, and in 2012 he was awarded the
CIO of the year in Finland.
EDUCATION: Masters degree in finance and business
administration, University of Tampere
Turkka Keskinen
PERSONAL PASSIONS: Tennis and all sports, family,

motorbiking, and reading popular science
turkka.keskinen@upm.com
Lets put it bluntly: It doesnt matter what IT thinks

about IT. What matters is what the business thinks about
IT. In fact, business perception becomes IT reality.
Several years ago, after I had been in the CIO role for
a couple of years, I set out to create a list of the principles
you might even call them philosophies that I believe
define a successful information technology organization
in the eyes of the business.
I brought a special perspective to this task, because I
had come to my CIO position from the business side,
where I was a customer of IT. In fact, most of my career
at UPM, a global bio and forest industry company based
in Finland, has been in finance and internal controls.
As I compiled my list, I tried to prioritize the items,
putting the most crucial principle first, and so on. The
version offered here isnt comprehensive. But these are
my top seven defining characteristics of a successful IT
function , all of which we in UPMs IT function try to live
daily.
1. Run IT Like a Business

To do this, you have to know the business that IT is in.
That means understanding the roles of ITs owners and
ITs customers. The owners, whether its the CEO or
CFO, may view IT as a cost center to manage. The
customers are looking to IT for technology solutions that
will meet the businesss needs and strategies.
Those two groups, however, have to be in sync.
Otherwise, the customers may be seeking solutions that
the owners arent willing to fund. Both groups need to be
sitting at the same table, literally, or you will end up not
pleasing either one.
At UPM, we created an IT steering committee with
representatives of all businesses and functions ITs
customers that meets six times a year and with the
companys executive committee two times a year. I dont
lead either committee. I can, however, guide the two
groups as they together prioritize investments. But
and this is crucial ITs owners and customers must
make the final decisions. This process makes the owners
and customers accountable for IT, even though they
dont deliver it.
2. Think Service First

IT must understand its customers not just the senior
business buyers of a system but also the end users of
that system, who may number in the thousands. Too
many IT organizations are isolated from end users. And
what those users want is friendly, empathetic,
person-to-person service particularly of the how do I
use this kind. Of course, excellent IT service is based on
excellent IT service processes. But people deliver it.
As for the higher-level its not working service
requests, listen carefully to what your customer is saying.
Never say no, but reserve the right to resolve the issue the
way you think is best. Of paramount importance: Deliver
as agreed upon with a smile and without excuses. Its
easier to do that if you dont overpromise. In the past, our
In the past, our IT organization

delivered 60% to 65% of what
the business expected and so
ended up disappointing users.
Today we are delivering 90% or
95% of what is expected. We
didnt change anything about
our delivery, but we did change
how we managed expectations.
IT organization delivered 60% to 65% of what the
business expected and so ended up disappointing users.
Today we are delivering 90% or 95% of what is expected.
We didnt change anything about our delivery, but we did
change how we managed expectations.
3. Empower Your People

IT is made up very smart people. To get the best
performance, you need to strike the right balance
between directing them and setting them free. I like to
say you need to be tough on targets and easy on people.
IT professionals arent afraid of a challenge, but they
dont want to suffer under oppressive and unnecessary
hierarchies. I believe in giving people the flexibility they
need to deliver and then rewarding them for results.
Not everyone is comfortable with that level of
empowerment at the start. If someone comes into my
office with a problem, I will coach him or her through
taking on the accountability for solving it. They leave
with an idea of how they might do that.
4. Keep IT Simple
One of the biggest problems for the IT organization is
that its native language isnt understood by business.
Another related problem is complexity, which is a killer
not just for ITs interaction with the business but also for
the development and management of ITs operations. Its
imperative to make IT simple for the business to
understand and for the IT organization to run.
I make sure my team members understand that using
technology jargon and acronyms doesnt make them look
like the smartest person in the room. Explaining
something in a way that everyone can understand does
make them look smart. Dont throw out terms like
middleware that mean nothing outside of IT. Use

metaphors to explain technical concepts. For example,
you might say that middleware is like the plumbing that
connects the water supply to a house.
Its equally important to simplify expectations and
decision-making processes. If the business perceives IT
as complicated, it is complicated. Perception is reality.
You must manage that.
5. Do the Right Things

If you want to serve the business, the business must
determine and prioritize the IT portfolio, including only
those projects that create value for the business. But lets
be honest; business people are not technologists. Nor
should they have to be.
ITs role is to help the business determine its
technology needs and justify them to ITs owners. At
UPM, we have made templates that help define the
components of a technology proposal one by one. The
templates create a clear structure not simply for the
proposal but for how the IT is developed. So when
business people come to the IT steering and executive
committees, they are presenting their requests in a
standard format.
This makes it easier for the business to take
ownership of the IT prioritization process.
6. Do the Things Right

Just as a successful IT organization enables the business
to prioritize its own IT portfolio, it must also involve the
business in implementation.
Here at UPM, we nominate a top-level project
chairman for the steering team, who represents the
business or function benefitting from the project. On the
IT side, we nominate only the most skilled project
managers, and they report directly to the project
chairman. By appointing a project chairman from the
business side, the projects become true collaborations
between IT and business. That ensures that business
benefits are driving the project.
A rigorous project management process is also
necessary. Perhaps most important, you must pay
attention to the people running the project. A successful
IT shop takes care of its project teams through all phases
of development and implementation.
7. Mirror the Business

IT leaders have preached the importance of business
alignment for years. But how do you achieve that?
Typically, a company has an organizational structure and
IT has its own, different structure. I have found that its
far more effective to model ITs structure after the
business.
That is what weve done at UPM. Theres an IT group
that works with global business process owners, another
with local business managers, another with end users,
another with portfolio and project management, and
others linked to strategy, sourcing, and other support

functions. We involve the business in any key
nominations within those groups and make sure to rotate
people through them.
But perhaps mirroring the business sounds too
passive. What we in fact are trying to do is zipper
together the IT and the business organizations. We want
our efforts so aligned intermeshed, even that the gap
that exists in so many companies is closed and our work
and goals are shared.
***
As I said, these are not the only guiding philosophies of a
successful IT function. For example, I believe you need to
manage and lead your suppliers instead of letting them
manage and lead you while treating them like
members of your own team. You must create an
enterprise architecture road map one that includes not
only processes, technology, and applications but also
data without feeling the need to follow it slavishly. You
need an explicit agreement with business about security
levels. And so on.
But an IT organization able to embody these seven
concepts , as we have tried to do at UPM, will have in
place the basic elements to ensure effectiveness and
success.
The Takeaways
It doesnt matter what IT thinks about
IT. What matters is what the business
thinks about IT. Its useful to think in
terms of ITs owners and ITs
customers. The owners may think of
IT as a cost center. The customers are
looking for business solutions. The
two groups need to be in sync.
IT needs to be simple for the business
to understand and for the IT
organization to run. If the business
perceives IT as complicated, it is
complicated.
A successful IT organization enables
the business to prioritize its own IT
portfolio. It also involves the business
in implementation.
Straight Talking
Chemtura, based in Middlebury, Connecticut, is a global specialty chemicals manufacturer whose products
are sold in more than 100 countries. The company serves major industries, including transportation,
energy, and electronics.
Reimagining IT
When Richard Seltz joined Chemtura, he seized the opportunity
not just to facilitate the companys strategic divestitures but also to
rethink the way IT operated.
POSITION: CIO and Vice President, Information Technology

COMPANY: Chemtura
WORKS FROM: Philadelphia, Pennsylvania
PROFESSIONAL BACKGROUND: Richard Seltz joined
Chemtura in 2011 and became the CIO in 2012. In that role, he
has transformed the organization to reduce costs while
seeking to improve customer satisfaction and service levels.
Previously, Seltz was the global business leader for the
transportation adhesives business at Rohm and Haas (now
Dow Chemical). Prior to joining the chemicals industry, Seltz
was a Vice President and cofounder of GeoStrategy
Consulting, where he focused on growth strategy and
operational reengineering with Fortune 200 clients. His
consulting career also included positions at CSC Index, Viant,
and EDS. served as a U.S. Peace Corps volunteer and
cofounded the first English-language newspaper in Bosnia.
Richard Seltz
Richard .Seltz @chemtura.com
EDUCATION: BSBA, University of Florida; MBA, the Wharton

School of the University of Pennsylvania
PERSONAL PASSIONS : Travel to off-the-beaten-path places
and keeping up with my two boys
Some IT leaders might not have jumped at the chance to

take the CIO role at chemical manufacturer Chemtura
shortly after its emergence from bankruptcy in 2010.
The company was overinvested in IT, yet IT was
underperforming. There were few best practices or
repeatable processes in place. There was little in the way
of strategy. And the companys
publicly stated strategy of
aggressive
portfolio
management took into account the
possibility
of
divesting
businesses a task thats
notoriously hard on the IT
organization.
Ive
had
a
varied
background: finance and IT,
management consulting and
business reengineering, strategy
and
implementation.
Most
recently, I worked for specialty
chemical manufacturer Rohm
and Haas (acquired by Dow
Chemical in 2009), leading a
global business and identifying
strategic
commercial
and
merger
and
acquisition
activities. So when Chemtura
came looking for a leader to step
in during a critical restructuring
period, I felt the job was a great
fit for me.
Chemtura had been growing, but it was operating as
a collection of seven independently operated businesses
that were hard to manage efficiently. Some were
underperforming; others were hitting it out of the
ballpark. Company leaders decided it was time to focus
our portfolio on key markets and segments. Shortly after
I joined, Chemtura sold its antioxidant and ultraviolet
light stabilizers business. The following year it sold its
consumer products business. We are now in the process
of divesting our agricultural chemicals unit.
The companys efforts to refocus and improve its
performance provided an opportunity for IT to do the
same. Today, we are a fraction of the size we were before
the restructuring, but careful outsourcing has made IT
more cost-effective. And our remaining in-house team is
able to focus on more strategic issues, such as planning
and system architecture.
First, you have to minimize the so-called stranded costs

the back-office support that is shared across business
units and doesnt necessarily decrease when a unit is
sold. In IT, for example, most of our costs relate to
infrastructure and solutions that serve everyone in the
company. Because I dont have many applications,
infrastructure, or people that
just support one business, there
arent many direct IT costs that
scale down as the enterprise
gets smaller.
As a result, you have to
reduce those fixed back-office
costs when you plan to divest.
They cant be a tax on the
remaining businesses. As a
shareholder, I recognize the
need to eliminate these costs.
But the right degree of cost
elimination is a delicate
balancing act between all and
none. The answer for us was to
outsource more. That was the
best way to lower our
operational costs, increase our
focus on the business, and
improve
IT
operational
effectiveness and efficiency.
Second, in the course of
divesting and restructuring,
you may wind up with a lot of
processes that worked for the company in the past but
wont in the future. If you dont revisit the IT operating
model, things can go horribly wrong. This was an
opportunity for us to rethink our legacy operations,
including licensing for systems that were put in place
years ago that no longer served the companys needs. It
was an opportunity to pull off those scabs and negotiate
new licensing agreements.
Third, you need to be smart enough to say, if were
going to do this divestiture, lets think this through far
enough down the road that we really address the
magnitude of what were trying to accomplish. We took
this as an opportunity to streamline the organization,
rethink enterprise licenses and relationships with
suppliers, and position IT to be able to support
expansion and growth.
In the past, there were

old ways of doing things
that hinged on the few
people who knew how to
do them. Or there were
things done a certain
way simply because
thats what everyone
was used to.
The Art of The Divestiture

One of ITs first priorities was to support strategic
divestitures. Were certainly not alone in that
corporate divestitures are on the rise, especially in the
industrial and manufacturing sectors. According to a
Deloitte survey in early 2013 nearly three quarters of
businesses expected their companies to attempt
divestitures over the subsequent two years.
To make sure that a divestiture delivers the anticipated
business results, a company must address three issues.
A Clean Slate
I inherited a group of very talented IT people and a very
weak strategy. My leadership team and I had a strong
point of view about what should be done: We needed to
transform the function and run it as a business.
We hadnt been cost competitive. We didnt follow best
practices like the Information Technology Infrastructure
Library
(ITIL)
and
operational
management.
The corporate restructuring was an opportunity to
change that. Its a colossal responsibility, but its the kind
of challenge that a world-class IT organization thrives on.
In the course of divesting and

restructuring, you may wind up
with a lot of processes that
worked for the company in the
past but wont in the future. If
you dont revisit the IT operating
model, things can go horribly
wrong.
Its the type of task most of us in IT show up at work every day
to do. Running IT as a business is a complex endeavor. It
requires creative and proactive thinking. And the folks who
have remained in my organization since the outsourcing are
completely focused on the challenge. It is difficult but
rewarding, and it helps further their personal development. At
the same time, its exhausting and challenging. There are so
many moving pieces that something will almost always go
wrong.
In addition, this kind of change creates great uncertainty
for an IT organization. Today, our internal Chemtura
resources are 13% of the size they were before outsourcing.
Weve kept planning, architecture, and service delivery
in-house and outsourced the rest. Outsourcing was a great
way to address our broken processes and reduce our costs, but
we lost a ton of tribal knowledge and key resources. Theres
good and bad with that. In the past, there were old ways of
doing things that hinged on the few people who knew how to
do them. Or there were things done a certain way simply
because thats what everyone was used to. By going through
this period of tough love, weve addressed many of those
issues.
For example, we used to have IT people on-site at every
one of our physical locations. The business users loved the
personal attention, but it wasnt economical or effective. And
it turns out that we can actually provide better support by
focusing on avoiding problems rather than having a
white-glove capability to fix them when they occur. In fact, our
old model exacerbated many problems and led to a wide range
of solutions and non-standard practices. In our new world, we
have a much better ability to execute standard processes with
discipline. Thats the kind of change we might have never
pushed through, but outsourcing forced us to do it. We got a
clean slate.
Managing Expectations
Nobody thinks much about IT until it doesnt work. They have
no idea if youre doing things better or cheaper, but they know
when they cant access a system. And as weve been making all
these changes, the question is not if, but when, something will
go wrong that affects our users.
Its important to set expectations. Were always going to
have people in the mid-levels of the organization complaining
because we made a change, and thats valid. But we need to
make it clear to them what is happening and why. That takes
an incredible amount of support from the senior leadership
team about the changes were making. And it requires us not
to be overly sensitive during this transformation. We can do
that because were confident that the benefits will outweigh
the costs.
Were not there yet, but weve made a lot of progress. IT
used to be in the passengers seat, driven by the business. Now
were partners.
Change is always around us. But thats what we get paid
for. And my team thrives on meaty challenges like this, as
opposed to simply keeping the lights on. There are lots of tests
that remain, Im sure, but we now have the platform to
address them.
The Takeaways
Corporate divestitures are notoriously
hard on the IT organization, but the
companys efforts to refocus and improve
its performance present an opportunity
for IT to do the same by, for instance,
managing costs and focusing on
strategic issues such as planning and
system architecture.
IT can help ensure that a divestiture
delivers the anticipated business results
in three ways: minimizing fixed costs that
dont necessarily decrease when a unit is
sold, revisiting the IT operating model to
spot outdated processes, and rethinking
licenses and relationships with suppliers
so that IT will be in a position to support
expansion and growth.
Setting expectations is critical during any
kind of transformation. There will always
be people who complain about a change,
so its important to explain what is
happening and why. To do that effectively,
the organization must be confident that
the benefits of the transformation will far
outweigh the costs.
Straight Talking
In India, MSD (or Merck, Sharp & Dohme, as the pharmaceutical giant Merck is known outside North
America.) has established leadership positions in dermatology, contraception, vaccinations, and diabetes,
in part through the companys efforts to provide holistic support to patients. MSD SPARSH, for example,
supplements diabetes medicines, such as those shown here, with the tools of information technology to help
diabetes patients manage their disease.
Emerging Technology,
Emerging Markets
We know that IT needs to be tightly aligned with the business. But in
a world where IT can drive valuable new revenue-generating
opportunities, the business may sometimes find itself falling in line
behind IT.
POSITION: Executive Director for Cardiovascular and Metabolics
COMPANY: MSD (Merck) India
WORKS FROM: Mumbai
PROFESSIONAL BACKGROUND: Since 2012, when Vivek Vasudev
Kamath joined MSD, he has led the accelerated growth of sales
and market share of the companys diabetes business. Previously,
he worked with Roche Diagnostics India as the head of the
diabetes care business unit in India and neighboring markets.
Prior to this, he was the business unit head at Novartis for the
ASEAN group of ten countries. Over the past two decades, Kamath
has also worked with global health care organizations such as
Schering-Plough, Warner-Lambert, and Pfizer in the areas of
marketing, sales, and general management in prescription and
over-the-counter drugs and diagnostics. He was a member of the
Organisation of Pharmaceutical Producers of India OTC committee
(1999-2004) and of the executive council of the Indian Society of
Advertisers (2002-2004).
Vivek Vasudev Kamath

vivek.vasudev.kamath@merck.com
EDUCATION: B.Sc. from K.J. Somaiya College; Masters in

Management Studies from Chetanas R.K. Institute of
Management and Research
PERSONAL PASSIONS : Fighting diabetes, enabling and
empowering diabetes patients to manage their health
For many years, there was an information technology

paradox in the pharmaceutical industry: There is
probably no function that employs more technology than
pharmaceutical research and development. However, the
commercial side of the business was largely devoid of
advanced technology.
Today, we recognize the power of IT in transforming
our commercial operations.
A Holistic Approach
The success of our products is not just about the drugs; it
is about the overall treatment of the patient and the
patients participation in the treatment. We must bring
the right products to the right markets. We must ensure
that they are accessible to customers in those markets by
pricing them on the basis of
customers purchasing power.
We need to ensure that our
products
are
properly
administered. Perhaps most
important, we must inform,
equip, and empower patients to
be active participants in their
treatment.
All
this
is
especially
important in emerging markets,
and that is where technology
particularly
information
technology on the commercial
side can play a big role. From my
experience leading sales and
marketing strategy in multiple
locations, I know we need to
provide much more patient
support in these countries than
in the developed world. Merck
(known as MSD, for Merck
Sharpe & Dohme, outside the
U.S. and Canada) was a late entrant to the Indian market,
but since 2009 the company has established leadership
positions in several therapeutic areas, including
dermatology, contraception, vaccinations, and diabetes.
We have gone from 51st to 28th in terms of domestic
market share, and revenue has increased 65% over that
period.
We have been able to achieve that growth in part
because of the partnerships weve developed locally with
Indian companies that can help us bring our products to
market and with government agencies that can work
with us to improve medical education, as weve done in
the areas of diabetes and cervical cancer.
Our growth also results from MSDs determination
not simply to market drugs but to couple that with
holistic patient support that is facilitated by information
technology.
For example, we are using web-based tools to help
doctors do risk analysis on their patients and design
customized treatment plans that include not only the
right pharmaceutical component but also lifestyle
recommendations. We are deploying iPads for our sales

organizations to use when they call on doctors, which
enables us to offer information on our products that is
customized to a doctors patient base and is easy to
update.
Personalized Touch
One of our most successful IT-enabled projects has been
MSD SPARSH (which translates roughly to
personalized touch), a program we launched in India
that helps diabetes patients learn how to manage their
disease.
When Merck researches a drug and determines its
efficacy in clinical trials, patients take the drug in an ideal
environment. We wanted to create a tool that would help
us recreate that situation in real
life. Diabetes management is
not just about popping a pill. It
is about motivating the patient
to participate actively in the
treatment and helping her in
her lifestyle choices, like eating
right and exercising, and a
number of other factors that
influence outcomes. In a
multicultural country as large
as India, it would be very
challenging to provide any type
of service or intervention in a
consistently effective manner
without a robust and capable
software platform.
Once patients agree to
participate
in
SPARSH,
counselors contact them at
regular, predefined intervals to
motivate and assist them in
their diabetes management.
Patients gain access to a web portal that helps them
understand their diabetes and its management. A
welcome kit offers useful tips and tools on diabetes
management. We customize support to suit a patients
culture, profession, age, disease status, and preferences.
For example, those in the south may be vegetarian, while
those in the northeastern part of the country are more
likely to eat meat. Therefore, we tailor their diet plans
accordingly. We couple that with a call center staffed
with highly trained counselors. The head of the call
center has a PhD in nutrition. The technology enables us
to create a closed loop system that has a positive impact
on clinical outcomes in the way that medication alone
cannot.
We built SPARSH from scratch. It was a collaborative
effort of the customer-facing business unit with
physicians from MSD Indias medical support and
technology experts from MSD Indias IT that made the
deployment of a comprehensive solution possible. We
had never dealt with call centers before on the
commercial side of the business.
Our growth also results

from MSDs
determination not
simply to market drugs
but to couple that with
holistic patient support
that is facilitated by
information technology.
When Merck researches a drug

and determines its efficacy in
clinical trials, patients take the
drug in an ideal environment.
We wanted to create a tool that
would help us recreate that
situation in real life. Diabetes
management is not just about
popping a pill.
We discovered the critical nature of patient privacy,

learning how to create the proper barriers around patient
identification while still enabling our counselors to do their
jobs. We created scripts that were medically and legally
sound, and ensured that our call center professionals would
stick to them. The training was exhaustive and intensive and
focused on both soft and domain skills. We discovered things
like the best time to call a patient. It was all completely new to
us, and it took some time.
When the contract with the service provider was up for

renewal, we decided to collaborate with HCL, a longtime
Merck partner that had customized the Oracle CRM to MSD
Indias specifications. This allowed us to consolidate all the
elements of the program in the hands of a single partner. HCL
has been managing SPARSH services since August 2012 and
operates the call centers, the technology, the processes, and
the big data generated by those processes. Periodic reviews
have demonstrated the impact of SPARSH in improving
diabetes management among enrolled patients the
program has served 40,000 patients to date. We recognize
that opportunities abound for improving the quality of
support to patients and for improving the level of
customization in the delivery of personalized services to
patients.
Looking Ahead
When I hear about a new technology, I immediately consider
how we can apply it to the pharmaceutical industry. As I
learned about cloud computing, it became clear that this could
help us. We need capabilities in many languages to support
our patients across India. With the cloud, we can staff call
centers with the right talent anywhere in the world, with
appropriate access and delivery controls that ensure patients
privacy, and we can connect them to the data they need to
provide patient support. It allows us to complement counselor
support with other communication channels and customize
support to enrich a patients experience.
We are evaluating mobile messaging for patients as a
complement to the existing gamut of services even as we
continue to improve our patient education content. I am
confident that through the use of various technology
platforms MSD SPARSH will soon touch the lives of 100,000
patients.
The Takeaways
Pharmaceutical R&D has long been a
technology-intensive area; now the
commercial side of the business is
increasingly driven by advanced
technologies that help ensure that the right
products are available to the people who
need them and are priced appropriately. This
is especially important in emerging
markets.
In many disease areas, treatment must be
more than offering a pill. Patients need
support in areas such as nutrition and

exercise. They need to learn about their
condition, and they may need personalized
treatment plans. IT can facilitate the kind of
holistic patient support that improves
clinical outcomes.
Providing comprehensive, personalized
support for end users may require the use
of multiple technology platforms. New
areas, such as cloud computing and
mobility, can take individualized end-user
support to a whole new level.
Straight Talking
Founded in 1918 to offer retirement services to teachers, TIAA-CREF, based in New York City, is now a full-service
financial services company that specializes in providing personalized financial advice to employees in academia,
medicine, government, the arts, and research.
Culture Change:
IT as an Innovation Engine
As business becomes increasingly digital and technology becomes
the product, the IT function needs to be a driver of innovation. This
new direction requires a big change in IT culture.
POSITION: Executive Vice President and Chief Information Officer
COMPANY: TIAA-CREF
WORKS FROM: New York
PROFESSIONAL BACKGROUND: As the Chief Information
Officer at TIAA-CREF, a Fortune 100 financial services
company, Annabelle Bexiga is responsible for the strategic
direction of technology programs and operations for all
business lines and support functions. Under her leadership,
TIAA-CREF embarked on a multi-year, multimillion-dollar IT
transformation that has improved technology infrastructure,
services, and web experience. She has been recognized as one
of Insurance & Technology Magazines Elite 8 and in
InformationWeeks 500 List of innovative companies, and she
received CIO Magazines 2014 CIO 100 Award.
EDUCATION: BS, Seton Hall University; MBA, Rutgers
University
PERSONAL PASSIONS: Traveling the world, supporting
womens causes, and tending to her city garden
Annabelle Bexiga
abexiga@tiaa-cref.org
The IT function is being transformed. Whereas we used

to focus primarily on enabling internal employees to do
their jobs, increasingly we are involved in satisfying
external customers appetite for technology.
In fact, in many industries, including financial
services, where information is at the heart of customers
purchases, IT essentially invents the machinery used to
manufacture the product.
That means working with the business to understand
the companys strategies and challenges and then
making innovative connections between the needs of the
business and whats possible technologically.
However, becoming a driver of innovation requires a
change in culture. And thats never easy.
Think of it as turning around a large ship. Move too
slowly and youll end up drifting aimlessly. Move too
quickly and the vessel will list precipitously or even
capsize. Once the ship is headed in the right direction,
though, tremendous progress can be made.
Turning the Ship

When I joined TIAA-CREF, four years ago, the IT group
played the important but traditional role of providing
business users with what they asked for. Given
technologys increasing importance to the business,
however, we needed to leverage our technology expertise
more actively to meet the needs of the business. Our
people needed to understand businesss problems and
work with business partners to identify the best
solutions. It was time for IT to take on a much bigger role
in driving innovation.
But this would require
turning the ship and a pretty
big one at that, with nearly
2,000 IT employees onboard.
Changing the culture to refocus
peoples minds and behaviors on
innovation would take both time
and careful execution. The first
component of the initiative was
to roll out culture change
training to all IT managers. The
training delved into topics such
as how ITs new mission drove
our overall objectives, how to
embrace change as a manager,
and
how
to
create
a
change-adaptive culture on
ones team. Once all IT
managers were trained, they
then trained the rest of the IT
population. By asking the managers to embody and
demonstrate that they embraced culture change from the
top down, employees were more receptive to the
messages.
of weaving innovation into the core fabric of the IT

organization. Innovation goals were added to the annual
goal setting process. We introduced our annual IT
Outcomes that Matter award to recognize up to three
teams or individuals whose work drove innovation. And
we continue to engage our employees and drive
collaboration by hosting a biannual IT expo, where IT
professionals showcase their efforts and identify
opportunities to leverage one anothers knowledge, and
by launching a collaborative space that promotes
collaboration, innovation, and workplace quality for IT
employees.
Another innovative mechanism we are using to
embrace culture change is techSPARK an internal
forum for idea generation and information sharing. It is
a simple concept that promotes collaboration through
social media and crowdsourcing, and is intended to drive
innovation and business outcomes. IT employees can
simply log on to our internal social media platform and
use a hashtag to share their ideas, and their peers can
provide feedback. IT then hosts monthly forums to
discuss the most popular ideas. This gives IT employees
a way to bubble up their great ideas to senior leadership
as well as to their peers.
A Reassignment of Duties
When improving the organizational culture, it is
important to have a structure that enables optimal
performance. Prior to the consumerization of
technology, IT was a back-office operation that
supported
front-office
employees. In the past five
years, however, there has been
a significant shift in the role of
technology
departments,
driven by technical advances
such as mobile computing and
social networking. With the
general population relying on
technology for their day-to-day
needs, barriers have been
broken down.
To adapt to these changes, I
reorganized my leadership
team into a hybrid service
model. There are several core
functions, such as information
security and infrastructure, but
the application delivery groups
are
organized
into
business-aligned teams. The
CTO for each team is also a part of the business senior
leadership team, enabling enhanced partnerships. This
integrated approach has proven to be a great way to
ensure that IT and our businesses are in sync and that all
parties are thinking holistically about business solutions.
With a hybrid structure and the introduction of new agile
development methods, IT is able to deliver more effective
and efficient solutions.
In many industries, including

financial services, where
information is at the heart of
customers purchases, IT
essentially invents the
machinery used to
manufacture the product.
Full Steam Ahead

Following the culture change training, we began the task
A focus of our culture change

initiative has been inculcating
the mind-set that innovation
isnt just the purview of the
leadership team. It is
everyones job
As the team members remedied the performance issues, they

realized that they also needed a way to monitor the website
performance improvements in real time. The application they
developed for this had usages beyond the website. It could
measure other end-to-end processes and so provide
performance information on different aspects of our business.
It is now the dashboard by which we measure our
performance as a business in real time.
The team could have just fixed the website and moved on
to their next project, but instead they did something much
bigger. To this day, the dashboard sits on my desktop as a way
to gauge performance and as a reminder that innovation is all
of our jobs.
Is That a Cloud on the Horizon?

All Hands on Deck
A focus of our culture change initiative has been inculcating
the mind-set that innovation isnt just the purview of the
leadership team. It is everyones job. Everyone from
infrastructure professionals to information security analysts
is encouraged to innovate.
One example of successful innovation happened when our
IT team created our performance dashboard, TIAA Today.
When I joined TIAA-CREF, our website suffered from significant performance issues. So we established a small team that
traced the path of those issues from end to end and, over time,
removed bottlenecks, streamlined processes, and significantly
improved performance.
Another key focus of our culture change initiative is to become

a leaner, simpler IT organization. To that end, we are working
on a next-generation infrastructure vision creating a
software-defined data center. By focusing on standardization,
automation, and broader leverage of public and private cloud
services, we are accelerating time to market and improving
our capabilities while reducing overall cost.
As we continue on the journey to become a strategic
business partner and to develop a high-performing culture,
we must always embrace innovation and be change adaptive.
Now that technology is so integral to every business, as
technologists, we have the opportunity to drive our
companies success.
The Takeaways
Transforming IT into a partner that can help
the business execute its strategy and drive
innovation requires a change in IT culture.
Its like turning around a large ship its
never easy.
To refocus peoples behaviors and
mind-sets, start with managers, educating
them on how best to contribute to overall
company objectives and how to create a
new culture on their teams. The managers
then embody that culture for all employees.
To send the message that innovation is the

job of all IT employees, its important to
include innovation goals in the annual
review process, create opportunities for
employees at all levels to present their
ideas to managers and their peers, and
promote collaboration and idea sharing.
This culture change may also require
structural changes to the IT organization
that integrate IT more closely with the
business.
Straight Talking
Spun off from manufacturing conglomerate Rockwell International in 1997, Meritor, based in Troy, Michigan, is
now a global leader in providing automotive systems and components to the transportation, defense, and
industrial sectors.
Shifting Gears
Faced with both legacy IT challenges and funding constraints,
Meritors IT team was able to identify a path to self-funding a major
transformation initiative while reducing costs passing along part
of the savings directly to the business.
POSITION: Vice President, Human Resources and Chief Information

Officer
COMPANY: Meritor Inc.
WORKS FROM: Troy, Michigan
PROFESSIONAL BACKGROUND: Prior to assuming his current
position at Meritor, in August 2013, Timothy Heffron held the
post of Vice President, Shared Services and Chief Information
Officer; from June 2008 to June 2011, he was the companys Vice
President, Shared Services. Before coming to Meritor, Heffron
spent 11 years at GMAC (now Ally Financial), including six years
as Vice President and Chief Information Officer at GMAC
Commercial Finance. He began his career in public accounting,
including three years with a local firm and six years with Ernst &
Young. Heffron is a member of the American Institute of
Certified Public Accountants (including the information
technology section), Michigan Association of Certified Public
Accountants, Gartner Executive Program, Hackett Group
Advisory Council, Oracle CIO Advisory Board, Detroit CIO
Executive Summit Governing Body, and Wayne State University
Board of Visitors (School of Business Administration).
Timothy J. Heffron
timothy.heffron@meritor.com
EDUCATION: MS, BA, Michigan State University

PERSONAL PASSIONS: Being a Hockey Dad, traveling, red
wine, golf (even though Im not very good)
Meritors heritage of innovation extends back more than

100 years, to the founding of a company called Timken
Detroit Axle, which produced state-of-the-art axles for
the rapidly emerging trucking industry. In the words of
Col. Willard F. Rockwell, the designer of one such axle
and a longtime president of the company, A big wheel is
nothing without an axle.
Over the years, the company grew through
acquisition to become Rockwell International, a
manufacturing conglomerate that was the largest U.S.
defense contractor in the 1980s. When Rockwells
automotive business was spun off as Meritor, in 1997, the
business was an innovative industry leader in axles,
transmissions, and other products and solutions for
commercial vehicles. Today Meritor is still an innovator.
But even a heritage this deep and unique isnt enough
to sustain a company in an era of fast-paced, globalized
competition. Thats why we are focused so intently on
transformation through a strategy we call M2016 a
three-year plan to improve our performance across the
board. Specifically, we are focused on four areas that we
believe will lead to measurable financial success:
operational excellence, customer value, product cost,
and high-performing teams.
As part of this initiative to transform the company,
we needed to transform IT as well. And that wouldnt be
easy, given the constraints imposed by legacy technology
and
the
limited
funding
available for eliminating those
constraints.
The Challenges We Faced
The Transformation We Are Leading

There are three key components to what we are trying to
do, two of which help bring the third to life.
The first is in our infrastructure space. For the past
six years, we have outsourced data center hosting. We
began looking at whether we could get more value by
changing providers, and as a consequence we have gone
through an extensive RFP process and are now
transitioning to a new provider. We are expecting that
the new environment will bring us a number of
advantages, among them a virtual private cloud. This will
give our organization self-provisioning capability and
other benefits, which, in turn, will increase our agility.
We will have more real-time backup and recovery
compared with current tape backup practices and
increased testing capacity. We will also completely
refresh our production hardware and achieve significant
cost savings.
A second component is our application support, an
area where we have also gone through an extensive RFP
process. We have had an existing staff augmentation
relationship with HCL for more than ten years. The
relationship was working well,
but we thought we could take it
to the next level, to a true
managed services structure.
We went through the RFP and,
after reviewing the options, we
awarded the contract to HCL
on the basis of our experience
with them, capability, and cost.
The benefits of going to the
managed services structure,
compared with a simple staff
augmentation structure, is that
it provides a 24/7, follow-thesun support capability, which
we need as a global company.
In coordination with that, we
are refining our current support model by establishing
centers of excellence around specific areas as part of a
shifting and refocusing of resources.
Instead of supporting all our applications in one
basket, our goal was to establish logical groupings of
applications based on particular capabilities we need to
support. The concept isnt really that complex it is
natural that we would group applications so that people
with specific support knowledge are appropriately
focused and have relevant business process familiarity.
For example, we wanted to have an ERP group, a group
focused on product life cycle management and
CAD/CAM, and so on.
The managed services arrangement will also enable
us to increase the resources in what we call our business
solutions area the part of our organization that liaises
For IT, it can be a hard sell if

you are looking to spend
multiple millions on a project
that may deliver savings and
performance benefits only
over the long term.
In recent years, IT had

attempted to go beyond simply
maintaining the companys IT
capabilities and instead take
them to the next level of
sophistication. For example, we
made some good-faith attempts
to get business support for an
ERP upgrade and consolidation
project.
However,
the
investment required for such a
project, and competition from a long laundry list of other
company priorities, meant we repeatedly failed to make
the final cut of approved projects.
For IT, it can be a hard sell if you are looking to spend
multiple millions on a project that may deliver savings
and performance benefits only over the long term. Many
projects say, installing a new press in a manufacturing
plant have clear and immediate benefits. Not
surprisingly, the ERP upgrade and consolidation loses
that battle virtually all the time, especially in
organizations that dont have endless amounts of capital.
We had to be judicious.
We realized that the only way we were going to
achieve our goal was to fund it ourselves. Thats when we
looked closely at our options and at alternative routes
forward. We had to consider our existing contractual
obligations and when those would expire. Then we tried

to envision what might be possible and when the timing
would be right.
The benefits of going to the

managed services structure,
compared with a simple staff
augmentation structure, is that it
provides a 24/7, follow-the-sun
support capability, which we need
as a global company.
with business partners to focus on new capabilities and

support new business needs as they arise. Again, much
like the infrastructure area, we expect to derive some
substantial cost savings compared with what we could
have achieved with the legacy model.
A Self-Funded Transformation
The third component of our transformation follows from
the first two: We plan to take the savings realized by
transitioning infrastructure hosting providers and
implementing managed services and invest those savings
not only in upgrades to and consolidation of our ERP
system but also in enhancing other IT capabilities that
drive improved business performance.
One challenge is that we have a legacy environment
with three distinct geographic instances of Oracle: North
America, South America, and Europe. In addition,
non-Oracle systems still support some parts of the
organization. Consequently, we are looking to migrate all
those legacy elements to a single global instance of Oracle
while updating Oracle to the most current release.
We anticipate a number of benefits from this
investment. First, it will immediately improve our ability
to support our environment. It will also drive
simplification and standardization deeper into the
technical environment and will make connecting and
integrating with other applications much easier. Our
connections and integration with customers and
suppliers will be simplified as well. This also simplifies
business intelligence and data gathering.
We see getting to that environment as a way to
increase agility and provide more capability to the
business. Taken together, those are compelling value
propositions.
In addition to leveraging our cost savings to
standardize our ERP environment, we plan to invest in
further augmenting our network bandwidth at select
sites. Based on the explosion of wireless devices around
the world and our move toward more and more global
applications, we see a need to augment both our WAN

and wireless bandwidth.
Finally, we also plan to make some additional
investments in very targeted skill sets in our IT team. As
an example, we are light in the solution architecture
space, so we plan to invest there. More expertise in
SharePoint and in MES (manufacturing execution
systems) would also help. The bottom line is that we
believe the savings from our infrastructure hosting
change and from adopting managed services will be
sufficient for us to self-fund investments in upgrading
and consolidating ERP, adding incremental network
bandwidth, and making strategic investments in technical
positions.
That still leaves additional savings on the table and
we expect to return that to the business so decision
makers can invest in the areas they think are most
important.
Although Meritor has some unique attributes, we
believe what were doing transforming from a keep the
lights on approach in IT to something much more agile
and responsive, while still cutting costs can be
replicated. Moving data centers and implementing
managed services arent new concepts. But for us, when
we looked at the numbers, we were pleasantly surprised.
Since weve found a way to self-fund this
transformation, all the business benefits that well be able
to leverage become immediately accretive. That is whats
so exciting. We still have a lot of work in front of us to get
to that point, but we are very motivated by the benefits of
The Takeaways
Expensive projects that will increase a
companys IT sophisticationbut may
deliver benefits only over the long
termoften lose in the competition
with other company projects that
deliver immediate benefits.
As Meritor learned, sometimes IT
must find a way to fund its own
projects. That requires evaluating
current contractual obligations and
envisioning what might be possible.
At Meritor, a change in infrastructure
hosting providers and the
implementation of managed services
yielded savings that IT is investing in
capabilities that can drive improved
business performance.
Big Thinking
The CIOs Role in the

Enterprise of the
Future
Andrew McAfee
Blog: andrewmcafee.org/blog
Twitter: @amcafee
The coauthor of The Second Machine Age explains how

digitization will change companies and the lives of those
who work for them.
Wonder what tomorrows business enterprise might look
like? A good place to start looking for answers is Andrew
McAfee.
McAfee, a cofounder of MITs Initiative on the Digital
Economy and Principal Research Scientist at MIT Sloan
School of Management, has spent most of his career
studying how information technology changes the way
companies perform, organize themselves, and compete
and, at a higher level, how computerization affects
competition, society, the economy, and the workforce.
His 2009 book Enterprise 2.0: New Collaborative
Tools for Your Organizations Toughest Challenges
showed how companies could effectively use the
collaborative philosophy and technologies of the web
both inside their organizations and externally with
customers and partners.
In Race Against the Machine: How the Digital
Revolution Is Accelerating Innovation, Driving
Productivity,
and
Irreversibly
Transforming
Employment and the Economy, McAfee and coauthor
Erik Brynjolfsson (also a cofounder of the Initiative on
the Digital Economy and Director of MITs Center for
Digital Business) focused on how advances in technology
threaten to automate not only many manufacturing jobs
but also those held by todays service and knowledge
workers.
McAfee and Brynjolfssons latest book, The Second
Machine Age: Work, Progress, and Prosperity in a Time
of Brilliant Technologies, builds on their previous book,
but with greater emphasis on the benefits to society of
advancing technology. In the book, a New York Times

bestseller when it was published earlier this year, the
authors argue that digitization has brought society to an
inflection point in the right direction bounty instead of
scarcity, freedom instead of constraint. In fact, the word
bounty appears more than 30 times in the book.
But the authors dont back away from the main theme
of their previous book that is, the societal disruption
this change is likely to entail. They argue that just as
industrialization the first machine age completely
altered the market for physical work, digitization will
radically change the market for mental work. Everyone
from physicians to product marketers may, in the not too
distant future, find themselves scrambling to find work
opportunities where machines complement and
augment but dont yet replace human capabilities.
Besides writing books, McAfee blogs, tweets, and
writes for publications such as Harvard Business
Review, The Economist, the Wall Street Journal, and the
New York Times.
As for outside interests, he watches too much Red
Sox baseball, doesnt ride his motorcycle enough, and
starts his weekends with the NYT Saturday crossword,
according to his official bio.
Putting aside for another day the question of whether
he could be replaced by a computer in one or more of
these activities, CIO Straight Talk Editor Paul Hemp
talked with McAfee about what The Second Machine Age
might mean for IT professionals.
I dont want to trivialize the breadth of your

argument in The Second Machine Age, which
ranges from predictions about macroeconomic
shifts to public policy recommendations. But
what does the book have to say to CIOs?
I think the book has both a specific and a general
message for CIOs. The specific one is that the job of
technology, the job of making technology work in an
enterprise, is certainly not immune to various forces.
Those forces are the almost ridiculous technological
progress that were seeing in areas that used to be the
domain of people alone: Natural language processing.
Piloting a vehicle. Speech production and synthesis and
recognition. Image recognition. Robotics that can move
through the physical world.
Like these things, getting technology up and running
and keeping it up and running in an enterprise has been
a fairly labor-intensive process. However, I hear a lot of
anecdotes, and I see some more systematic evidence, that
this is likely to change that the work of getting and
keeping technology up and running is likely to become a
heavily automated activity.
Heavily automated in what way?

I keep hearing stories like, I build data centers to order.
I put them in shipping containers. I ship them to
wherever you want them. You just plug the power and the
bandwidth in on one end, and I can spin you up whatever
flavor of capacity you want. And thats a big deal.
The cloud is also part of this trend. The move toward
tablets and other very easy-to-use devices that dont need
a lot of professional care and maintenance thats part
of the trend, too. I think that, generally, the work of
enterprise technologists, which has been very
labor-intensive, is likely to change maybe sooner than
a lot of us think.
Now granted, I dont foresee technology that
configures itself and runs itself completely hands-off,
completely labor-free being adopted by the Coca-Colas
of the world tomorrow. That just seems implausible.
Because of the size and complexity of their

operations?
Not because of complexity. Companies like Netflix and
Amazon and Facebook have astonishingly complicated
technology needs; they just have a different stack.
No, its because huge enterprises like Coca-Cola have
an amazingly big and complex IT legacy. Theyre just not
going to switch over entirely to the cloud or the iPad, I
dont think, in the next five to ten years. That feels too
soon, given the degree of legacy, in every sense of the
word, they would need to overcome.
But when we look at start-up companies and how
theyre growing, theyve got nothing that looks like
old-school enterprise infrastructure. They start from the

ground up. They start from a very different cost and labor
trajectory, and I dont think that theyre going to move
over to the older trajectories as they grow.
The overall trend is that companies of all stripes will
need, proportionately, many fewer people in IT. Those
who remain will be very highly valued, very highly
skilled, very important.
Inertia and incumbency are powerful forces, but the
forces of competition and disruption are likely to be more
powerful.
If technology does everything for us in the future,

wont we need people who know how to run it?
That leads me to my more general comment. Enterprises
are going to need someone to help them navigate the
second machine age, help them understand the sectors
along which technology is advancing, how those
advances could change what the company does, how they
could change what competitors are doing, how the
companys industry is going to change, how business
models are likely to morph over time. Were going to
need guides, were going to need Sherpas, were going to
need people to help us understand this. I think that if the
CIO plays her cards right, this can absolutely be her role
in the enterprise.
Would that sort of consulting role require

different skills than those of todays typical CIO?
Actually, the CTO often plays this kind of role. But this
implies, to me, a pretty big opportunity for CIOs. The
more traditional role of the CIO I deliver stuff on time
and on budget and I keep the lights on is going to
become less important fairly quickly.
What kind of person might this technology

Sherpa be? Everybodys telling the CIO to be
aligned with the business and think like the
business, but the role youre describing is
somewhat different, isnt it?
As I said, I think a lot of CTOs today are currently
fulfilling that role. And they get help from the consulting
companies of the world, from the analyst firms of the
world. Theres a pretty big industry devoted to helping
people understand the pace and scale and scope of
technological change. As the pace of that change
accelerates, the role becomes even more important. I
cant tell you the number of senior leaders in enterprises
who are saying, What is this big data thing? What is this
artificial intelligence thing? What do you mean robots
are about to take over?
Andrew McAfee speaking at the 2014 MIT Sloan CIO Symposium in Cambridge, Massachusetts.
Is there a response within companies to those

questions?
Sometimes there is; sometimes there isnt. Obviously,
you cant make sweeping statements about lots of
different companies, but in general I think a lot of the
execs I talk to are really casting about not just for
answers but for Whos going to help us with this?
Wheres the guidance going to come from?
Can that help come from within the enterprise?

Or does it take an outsider with a fresh
perspective?
I think both are possible. Companies tend to listen to
outsiders more than insiders. But insiders often have a
better idea of how to get things done.
How are business executives responding to the

book? Are they surprised?
Once you show them enough examples of this kind of
science fiction, the gee-whiz stuff that were seeing, they
start to say, I think the earth might be shifting
underneath my feet. They are receptive to that message,
because the evidence is just growing all the time.
Are they enlivened or enervated by the

message?
Technologists are pretty excited about it. Venture
capitalists are excited about it. Tech entrepreneurs, the
people who consider themselves in the business of either
producing technology or using it to disrupt other things,
are incredibly excited about it. Theres a palpable sense
of energy I feel when I go to Silicon Valley, when I go to
San Francisco, when I talk to entrepreneurs at home in
Cambridge.
And what about more traditional executives at,

say, Coke or some other non-technology
company?
Most of them are enlivened, too. I think there is a
growing awareness that we are heading into a deeply,
deeply interesting time. Yes, a lot of challenges come
along with that, but I dont often get the sense that people
wish they could just shut off all the machines.
What about you? After researching and writing

this book, are you an optimist or a pessimist
about our future as human non-machines?
Oh, a huge optimist. We all want a world where there is
more wealth and less toil, less drudgery. Thats the world
were creating. And again, I think its going to come
quicker than a lot of us think. Im massively optimistic
about that.
The transition, however, will be painful its already
painful and its going to continue to be painful for a lot
of people. The issue of How do we share the economic
abundance that technology creates? is going to be huge.
I do think that more and more people are going to have a
challenge offering their labor to the economy and having
that labor adequately rewarded and valued.
But thats not the whole story. We did try to
emphasize the good news in this book a great deal more
than we did in our previous book.
Whats next?
Were thinking about a look at the general managerial
and business implications of this phenomenon. The
Second Machine Age is more of an idea book, a policy
book. We want to write a business book about whats
going on.
Any initial ideas about what the messages for

managers might be?
Fasten your seatbelt. Were going to try to write a
detailed book about that.
Big Thinking
Failure Can
Wire Your Brain
for Innovation
Michelle Gallen
Twitter: @michellegallen
But dont confuse Failure with Failure Lite I failed. How nice.
I learned so much often hailed breezily by management
experts as something everyone should experience and
every company should encourage. Real failure, according to
this serial entrepreneur, isnt pretty.
As Michelle Gallen walked to the podium for her keynote
presentation at the Mobile World Congress in Barcelona
earlier this year, she was carrying a secret.
Gallen, the CEO of Shhmooze, a social networking
start-up, was about to reveal to the audience and her
fellow panelists in the Innovation Unleashed session
that Shhmooze wasa failure. The cash had run out.
There was no revenue. The London office had just closed
its doors. And the honest-to-God truth, Gallen told the
crowd, is that it hurts like hell to stand up here and say
that especially when youre sharing the stage with
some real success stories.
Gallen cofounded Shhmooze in Belfast in 2010 as a
way to help professionals increase the opportunity for
face-to-face networking at conferences and other events.
The software platform aggregates publicly available data
from social networks and event attendee lists and
matches the information with a users LinkedIn and
Twitter contacts or contact wish list to identify
events those contacts will attend.
The idea for Shhmooze grew out of personal failure.
When she was 23, Gallen who had graduated near the
top of her class at Trinity College , Dublin, and landed a
coveted publishing job in London contracted a

life-threatening form of encephalitis and suffered serious
brain damage. Although she survived, she spent the next
several years relearning how to walk, talk, and carry out
other basic physical and mental tasks.
Much of Gallens presentation in Barcelona
recounted the harrowing and humiliating tale of her
recovery, learning where her mouth was, for example,
and then how to use a fork and then a knife and then the
two of them together. It was a tale of trying and failing
over and over again.
She had to teach her brain new pathways the old
ones were destroyed forever in order to accomplish old
tasks. And technology helped her do this. Early on, she
compulsively played Las Vegasstyle solitaire, and over
time her recall improved to the point where she went
from losing to winning thousands of virtual dollars a
game. As her memory improved, she began playing the
online game Civilization. In the beginning, she remained
defensively huddled in her own city but soon realized
that this provided only temporary protection from
enemies. So she began to take risks, to explore, to win
and lose other tribes villages.
Failure on her laptop was private and safe. But public

failure was a necessary part of her recovery, too. She
described how, as she was able to venture from her
familys home, she would be mistaken for a drunk when
she had a seizure or for a shoplifter when she walked out
of a store with something she had forgot she had picked
up. Still, she told the audience, I discovered that I learn
fastest and I recover best when I try hardest and fail
biggest.
By the time Gallen was 30, she had substantially
rebuilt not only her personal life but her career, working
as a consultant on multimedia and e-learning projects for
the BBC and other organizations. In 2008, she launched
Talk Irish (www.talkirish.com), an award-winning and
self-supporting social network for teachers, speakers,
and learners of the Irish language.
In 2010, she and cofounder Mehdi El Gueddari
launched Shhmooze (www.shhmooze.com). A lingering
effect of her brain injury was difficulty remembering
faces, and she thought an app to help people identify and
connect with their professional contacts at conferences
would have appeal beyond those with her handicap.
By many criteria, Shhmooze was a success. It was
featured in Wired, TechCrunch and The Times of
London. It was a winner or finalist in numerous
European awards for best mobile app. In the end,
though, Shhmooze wasnt able to generate revenue for
example, by attracting paying subscribers to a premium
version of the free service or to turn a profit.
Gallen is a believer in the power of failure to reveal
innovative solutions to tough problems for
individuals, corporations, and nations. She doesnt
disagree with the breezy catchphrases so often heard in
management circles these days: Failure is good. Fail fast
and often. Make room for failure. Allow your people to
fail.
Just dont kid yourself, she warns, that failure is easy
to take.
CIO Straight Talk Editor Paul Hemp talked with
Gallen a self-described straight talking geek about
the effects of falling flat on your face, and when enough is
enough.
Have we romanticized failure or maybe even

trivialized it in the business world?
I think there is a certain glamorization of failure, but its
usually by people who have failed and then gone on to
succeed. And that kind of success-to-failure story is very
seductive. J.K. Rowling and Steve Jobs have both given
amazing commencement speeches that basically say, Oh
my god, I was a failure but look at me now. But you dont
get an awful lot of people talking about failure when
theyre in the middle of it, standing up and saying, Yeah,
everythings falling apart right now. And that means it is
very lonely to be in the moment, particularly when youre
in start-ups and talking about funding, because the

default position is, Oh my god, everything is awesome,
awesome, awesome. Its game playing to a great extent
when youre in the start-up world.
Still, I think J.K. Rowlings message in her speech
was important. Instead of saying, You guys are
awesome, and everythings awesome, I think she was
saying, You are going to hit some difficult times in your
life, and the biggest and best and most important lesson
you can learn is that youve got to pick yourself up again
and keep trying, keep going.
But failure doesnt guarantee success, does it?

I dont think you learn without failing. You learn by
trying, and if youre trying something, youre generally
going to fail until you get it right. Its difficult to put it
down to one thing. If youre going to do a start-up, I think
its really unlikely that one thing will make it fail; I think
its going to be lots and lots of different things. With a
start-up, you have to take on a lot of failure and keep
going and keep going and keep going.
What about failure and innovation within an

organization? When do you kill a failing initiative?
In the start-up world, innovation is the ability to take an
idea and turn it into an invoice. Lots of larger business
organizations also rely on cash flow to keep them alive,
and therefore innovation has to be monetized. If youre
Apple or Microsoft, youve got a war chest, and you can
actually allow failure. A lot of companies cant actually
afford it. Its quite an expensive hobby, failing.
Im interested in the idea of failure as an endpoint. In
a start-up, when does it happen? Is it simply when you
run out of cash? Or does it happen when you run out of
enthusiasm? I know start-ups with money in the bank
that dont have fuel in their tank.
For me, the final failure point is when my heart isnt
in it. Its not about the paycheck. I really need to believe
in the stuff Im doing. And sometimes people like that
can overcome the odds and do something spectacular. It
doesnt matter how little money is in the bank; theyll
find a way to keep going. But once the emotional fuel is
gone, it doesnt matter if youve got $100 million.
I lost some of my motivation when we saw how
people were using Shhmooze. My ambition was to help
people see who was around them at events so that they
could start great face-to-face conversations. But we
learned, looking at our user data, that more people were
interested in stalking than in talking. People wanted to
know where their colleagues or peers were going
andwhen, but they didnt necessarily reach out or start
conversations. If somebody had said to me, Wed like
you to give up three years of your life to build a stalking
app, I would have said, What the hell?! What we were
Michelle Gallen speaking at the 2014 Mobile World Congress in Barcelona.
seeing was not stuff that I was excited about, that

motivated me.
Shhmooze failed. What can you say about its

successes?
We didnt ever raise a lot of money, but we did get
good attention for what we were doing. We were one of
the early players in the field. And I had a pretty strong
personal story about why I was doing it: I had a
devastating brain injury, and I basically rewired my brain
using tech, first my laptop and then other things as tech
got better. One of the reasons I function so well these
days is because my incredibly smart phone has
augmented my brain. I felt that very strongly and sold
that very clearly, long before people were thinking of
your phone as being something that could support your
life. For most people, it enhances their life. For me, it
was and is absolutely central.
Thats where I got the idea for Shhmooze. Because of
my injury, I still dont easily recognize faces, even people
I know well. I was at a conference, looking at a paper
handout and going, Why isnt my phone telling me
whos here and how I know them and also introducing
me to other people I should know, based on who I already
know? It was an absolutely key moment for me, looking
at my phone and saying, I know my phone is capable of
this. Why isnt there anything out there thats done it?
So in a way, we were in the right place at the right

time to get coverage that, perhaps, gave Shhmooze more
value than it really was worth. When Google Glass came
out and I was looking at all the fluff and the excitement
about that, I was saying to myself, Yeah. no? When
this is contact lenses, OK, but right now its just an ugly
headset. Were going to look back on this in five years
and go, Wow, how nave. When youre early in a space,
nobody knows how things are going to be adopted, so you
may get more goodwill than your solution really
deserves. Bloggers and newspapers and magazines all
like to talk about whats sexy and hot rather than whats,
perhaps, a really good solution.
If youre doing enterprise software and youre turning
over $100 million per year, your enterprise plug-in for
such-and-such is probably getting absolutely no
attention from TechCrunch. It doesnt matter how many
people youre employing or how smart your solution is,
because its not as sexy as, Here is an Internet of Things
light that turns on when you walk into the room and
sends an alert to your girlfriend to let her know youre
home. There are stories and there are solutions.
Solutions arent always sexy.
So is Shhmooze really dead?

The platform is still there. We still service our app. But
were not on it full-time. It became clear: If its not
making money, we cant afford that.
`
Solution Spotlight
Two
TACKLING BIG
IT CHALLENGES
The CIO faces no shortages of daunting

challenges:Keeping the lights on while
figuring out how to reinvent the lighting
system. Getting his arms around the
SMAC stack (social, mobility, analytics,
cloud) and then bringing it into his
organization. Trying to reinvent the CIOs
role in order to keep his job relevant or
simply keep his job.
But the following two articles describe two challenges
that we believe are of crucial importance to the IT
function and to the changing enterprise that it serves.
The first, Reborn Digital, describes a change the
business challenge that involves transforming the
very nature of an organization. The second, "Proactive
Obsolescence," describes a run the business
challenge that involves overhauling the application
support and maintenance process. Both articles
conclude with HCLs point of view on how to respond to
these daunting challenges.
Reborn Digital: Reinventing the Enterprise

for the Digital Age
Steven Cardell,
President, Enterprise Services and Diversified Industries,
HCL Technologies
Every business faces its own challenges. But in every
company no matter its size, industry, age, or location
there is no more important role for the CIO today than
building a digital enterprise.
The digital enterprise has a single source of data,
structured or unstructured. Anyone within the enterprise
and any stakeholder outside it can access and analyze
that data anytime, anywhere, via any device. With that
digital backbone, the organization can deliver
unparalleled customer intimacy.
Digitization is a strategic priority for companies
today. In a recent survey of 850 senior executives
conducted by McKinsey & Company, respondents
ranked as their top priorities digital customer
engagement; digital innovation of products, operating
models, and business models; big data and advanced
analytics; digital engagement of employees and
suppliers; and digital customer life cycle management.
At a time when long-term differentiation no longer
exists and innovation cycles are shrinking, the digital
enterprise always wins. Consider Google, Netflix,
Amazon, and Zappos: Theyve outpaced the competition
because they have a digital ecosystem capable of
delivering an unmatched customer experience.
Of course, those companies were born digital. For the
other 97%, becoming a digital enterprise requires a
rebirth. And this reincarnation is an imperative. The
innate digital enterprise unrestricted by legacy
technology, business processes, or thinking is
disrupting business models at an alarming pace.
Traditional organizations must completely overhaul
their corporate and IT strategy or get left behind.
A Money and Technology Problem

Becoming a digital enterprise requires more than
slapping some new technology on to the front end of the
business. To transform itself, the traditional enterprise
must challenge and change the technology architecture
of the organization.
Many companies are hitting a wall in their attempts
to do that. For the average company, 85% of the
technology budget is spent keeping the lights on. That
leaves little for transformation. Technology is holding
these companies back. The 1960s are alive and well and
living in their corporate data centers. Mainframes
continue to chug along. And many large companies are
operating on decades-old legacy systems that dont talk
to each other. They cant pop into their supply chain and
tell you where your order is at any second, like Amazon
can. They cant predict what consumers want the way
Google does. Their architecture isnt capable of taking a
single view of any data object and dealing with it in a
consistent manner in real time. That makes the
enterprise slow, inflexible, and unable to collaborate.
And it limits customer intimacy, innovation, and
ultimately growth.
Its Not Where Youre Going But Where Youve Been

So, whats the solution? Implementing new technology is
easy, cheap, and actually kind of fun. But it wont solve
the core problem. A CIO charged with transforming the
traditional enterprise into a digital one must address that
85% of technology thats holding the company back.
Not surprisingly, most business leaders approach

digital transformation with a singular focus on what
theyre moving toward. That seems perfectly sensible.
But it doesnt work. The most important thing is not what
youre moving to but what youre moving away from. Its
not about implementing cool mobile apps or deploying
advanced analytics. Its about ripping out technologies
that have been in place for half a century.
Indeed, the business leaders in the McKinsey survey
say that their companies must address key
organizational issues before they think about
implementing digital technologies to transform the
business. The most significant hurdles to digital
transformation, respondents say, are difficulty finding
talent, organizational structures not designed
appropriately for digital, inflexible business processes,
lack of quality data, and the inability to adapt an
experimentation mind-set.
In short, the biggest challenge is figuring out how to
get from where you are now to where you want to be in a
reasonable amount of time and for a reasonable amount
of money. What companies need is not simply a bunch of
new point solutions that dont talk to each other. They
need an end-to-end framework that delivers the business
outcomes theyre seeking.
Think about hosted sales-force-automation software.
Its a great solution that seems to do it all. Until one day,
the sales guy comes in and says he needs to access it on
his mobile device. So IT builds a point solution for that.
Then he says what he really needs are mobile analytics
tools. So IT develops those. Then he needs functionality
to calculate sales commissions. So IT rolls that out. The
next thing you know, IT has developed 30 tools that
operate in isolation from one another. What companies
need is a digital systems integrator who can stitch
everything together to deliver improved business
outcomes.
Digital Systems Integration

The ultimate goal of the digital enterprise is to have a
common, lean transactional system of record with open
APIs that enable internal and external collaboration.
Companies can take four steps to achieve that kind of
integration.
First, they must assess their existing digital landscape.
That starts with a high-level look at corporate needs and
objectives. It continues with a nuts-and-bolts appraisal
of the current infrastructure, application, and device
architecture. And it ends with an assessment of the
organizations readiness to move into the digital realm.
This hard look at all the transactions and data that sit
within the organization enables CIOs to develop a
strategy for technology modernization. And its an
eye-opening exercise. Most business leaders dont even
realize the thousands of apps they have or the age of their
infrastructure before they do this.
The second step is application modernization. Can
you rewrite it? Re-implement it? Move to a software
-as-a-service product? Decommission it? Consolidate it?
You create several buckets of options and develop a

modernization plan.
Third, once the applications are modernized, its time
to implement a data model. The goal is to have a single
data source. Creating frictionless data flows that move
throughout the enterprise, regardless of where the data
resides, is the most difficult but most important step
in the digital reinvention. If all your information is digital
and accessible, youre halfway there. Once you create an
application architecture that enables access to all data
through one mechanism, youre 90% done.
Finally, it is time to think about newer digital
technologies, whether that means multichannel services,
mobile solutions, web or e-commerce content, sensors,
analytics tools, or collaboration software. Contrary to
what has been happening in many businesses, deciding
on the cool, new technology is the last step in becoming a
digital enterprise.
One manufacturer serving the aerospace and defense
industry came to us knowing that the organization had
traditionally
underinvested
in
its
technology
environment and needed to reinvent itself as a digital
enterprise in order to support its ongoing growth and
global expansion. Managers began with an assessment of
their existing environment and were surprised to
discover they had more than 10,000 shadow applications
within their organization. We developed an application
modernization plan, determining what systems needed
to be retired or replaced and how to implement single
instances of critical enterprise systems of record to lower
support costs and free up money for innovation.
Since then, they have been able to move on to
innovation, exploring how they can transform
themselves with new systems of engagement. They
started with a mobile sales application. Then came an
omnichannel
project
to
support
both
their
business-to-business
and
business-to-consumer
operations. Now theyre evaluating a proof of concept for
predictive analytics that will help them reinvent their
product performance processes.
And the work continues. The digital enterprise
transformation does not take place all at once.
Companies that succeed in this pick their spots a few
parts of the organization and take the necessary steps
to transform them. Typically they start with a pain point
within the enterprise and begin with an assessment of
the current environment and the companys vision for
the future. They build an application modernization
plan, implement a new data model, and deploy new
digital technology. Then they start all over with another
area.
Digital systems integration is a loop. Companies that
do it well go around this loop many times. Few can
address their entire landscape all at once. But by
systematically moving through the organization,
addressing one area after another, the company is able to
gradually transform itself into a modern digital
enterprise, with all the competitive advantages that this
can create.
Proactive Obsolescence: Turning ASM Costs into

Change-the-Business Investments
Mark Hirst,
Global Head, Public Services
HCL Technologies
Its yet one more dilemma for beleaguered CIOs to
wrestle with.
As most organizations continue to cut IT budgets, the
cost of application support and maintenance, or ASM,
continues to grow. This trend is likely to continue, with
ASMs share of the IT budget also growing, as mobility
technologies become more integrated into enterprise IT.
A CIO can scramble to wring small savings from this
or that part of the ASM budget often by securing
incremental discounts from IT service providers all the
while facing ever greater demands for ASM services. Or
the CIO can adopt a radical approach successfully being
employed by a growing number of companies:
Attack the root source of applications-related
problems and, by redesigning the underlying process and
streamlining the application portfolio, strive to make the
task of application support and maintenance virtually
obsolete.
Doing so will free up people and funds from this
classic run-the-business (RTB) activity that can then be
invested in value-creating change-the-business (CTB)
initiatives thereby addressing another crucial dilemma
that CIOs face as IT budgets are squeezed.
The Expansion of ASM

Whereas once hardware was king, software now
dominates the corporate IT landscape. And as
applications play an increasingly pivotal role in enabling

companies to launch new services and generate
competitive advantage, the famous quip theres an app
for
that
has
never
been
more
relevant.
A 2013 Gartner report found that application
spending represents on average 35% of corporate IT
budgets. And in our experience, at least 50% of an
applications cost across its life cycle is for support and
maintenance. Furthermore, in a survey of executives
from 300 global organizations across industries, 83% of
respondents said that the cost of maintaining and
supporting applications was increasing year-on-year.
(For some highlights of the survey results, see the sidebar
The State of ASM.)
Clearly, ASM has none of the sex appeal of such
trending topics as big data or mobility. But the fact that
ASM represents such a disproportionately large chunk of
the IT budget and that spending on ASM offers very
little business value in return makes it an increasingly
important and troubling item on the IT agenda. Add to
this that fewer than 20% of organizations have an
application services strategy, leading to unmonitored
overspending and underperformance, and ASM
suddenly becomes a big budgetary blind spot.
With the IT function having to evolve at a rapid rate
to become more aligned to business needs and deliver
tangible results in the form of revenue and growth, CIOs
can no longer afford to support approaches that dont
deliver those results. Traditional ASM is a hindrance to

the goals of the new lean, performance-driven IT
department, sapping funds from the budget that could be
better invested elsewhere. Clearly, an alternative
approach is needed.
Traditional Approach to ASM

Although ASM is draining most IT departments of
valuable resources that could be redirected to
value-creating activities, ASMs importance shouldnt be
minimized. This is a business critical activity. A huge
ASM budget, resulting from a large number of incidents
and service requests, is a symptom rather than the cause
of the problem plaguing the IT department. In other
words, it isnt that applications dont enable an array of
value-creating activities but rather that the cost of
supporting and maintaining them, in order to ensure
their performance, is so high.
Traditionally the ASM function is organized in silos
around particular applications. Rather than having a
team focusing on a business process, such as supply
chain management or e-commerce, people are dedicated
to a particular module or application, such as SAP or
Oracle.
As the number of applications within the business
grows and the landscape becomes more complex, this
approach begins to make IT rigid and reactive at a time
when user expectations of application performance have
increased. Unable to meet these demands, the IT team
faces more dissatisfied users raising an ever increasing
number of support tickets. Often the ASM team gets to
know about impending problems only when these tickets
are raised.
The importance of the ASM function has been further
heightened with the increasing expectations of the
internal and external customers. If an application is not
able to flex with increasing business demands and falters
or goes offline, it presents a significant business risk.
This might not be an issue if the application is an internal
chat tool, but if it is a customer-facing application, such
as an online mortgage calculator, the business
consequences can be serious. Not only may the company
lose a customer, but in todays era of social media,
prospective customers might Tweet or Facebook their
frustration to hundreds of followers.
A key issue is that ASM teams often wait for incidents
to be logged before resolving them. This becomes a
vicious circle, and thus the team is always one step
behind. Also, it is usually difficult to identify the link
between the business processes and the IT landscape.
Thus the ASM team is always looking at the symptom
rather than the cause.
This has two implications. First, teams arent
learning from previous incidents and as a result arent
able to spot performance trends that indicate an
applications performance could shortly be under threat.
Rather than preventing fires, ASM has focused on
firefighting. Second, a lot of efficiencies that can be
achieved by being proactive towards incident resolution
The State of ASM

HCL sponsored a survey designed to assess
large companies application support and
maintenance (ASM) practices and the
business impact of those practices.
Executives from 300 large enterprises
(more than 1,000 employees) in the U.S.
(150 participants) and the U.K. (150
participants) were interviewed between
October and November 2013. Among the
surveys findings:
On average, ASM accounts for 38%

of large organizations' overall
IT budget each year.
83% of respondents reported that their

cost of supporting and maintaining
applications was increasing year-on-year.
On average, large organizations spend

68% of their IT budget on run-the-business
(RTB) activities.
83% of respondents said they need to

reduce RTB costs in order to innovate more.
Through a 30% cost reduction in ASM,

Global 2000 organizations could free
approximately $6.8 billion of working
capital.
are not realized.

Together, these factors have resulted in a stagnating
ASM function.
Revolutionary Approach to ASM

Without a complete transformation of the ASM process,
the demands on IT to solve applications problems will
only increase, resulting in the allocation of scarce
resources to an activity that creates little business value.
The CIO must lead a revolutionary overhaul of the
ASM function that includes:
Redesigning the process for solving problems,
meeting service requests, and maintaining applications
Structuring the ASM function around business
needs rather than software applications.
(For some of the key elements of HCLs method for
transforming ASM, see the sidebar A Game-Changing
Alternative.)
One objective of the ASM overhaul is to create a
zero-ticket application support and maintenance
environment. How? By tracking and solving root cause
issues, many tickets can be effectively eliminated before
they occur. Instead of fixing the most obvious or
expensive problems as they emerge, this new approach to
ASM seeks to drive efficiencies at a fundamental level,
through the use of automation and lean methodologies.
Further efficiency is achieved through application
portfolio optimization, the weeding out of outdated,
redundant, or non-strategic apps.
The ultimate goal is proactive obsolescence an
environment in which ASM is no longer a key activity.
This frees up both funds and people that can be shifted
from the run-the-business work of ASM to innovative
change-the-business activities that can fuel growth and
create significant value for the company.
Note that this approach also aims to make traditional
applications outsourcing providers obsolete. Indeed,
A Game-Changing Alternative
HCL Technologies alternative approach to outsourced
application support and maintenance the basis for the
point of view expressed in the accompanying article is
called Alt-ASM. It differs from the traditional approach to
ASM in five key ways, each representing an alternative
solution to a problem traditionally facing CIOs in
applications outsourcing.
Proactive workload reduction: Instead of focusing on ticket
resolution, HCL focuses on ticket removal.
Achieving business objectives: To have an impact on the
business from Day 1, HCL targets business alignment as
part of its SLAs.
Proactive impact on IT agility: Transformation of the IT
landscape begins at the time of transition, as HCL maps the
landscape to business processes.
Flexibility in service delivery and resourcing: HCL offers
clients a flexible staffing model that provides run-thebusiness resources whenever there is need.
these vendors can be part of the problem: With ASM a

great source of recurring revenue, many providers are
reluctant to reduce it significantly in fact, they may be
motivated to grow their ASM engagement. With ASM
contracts typically renewed every three to five years, and
with the incumbent having an advantage when a contract
is up for renewal because of the risk of switching vendors,
ASM providers have had little incentive to modernize or
seek innovative approaches two the application
management process.
A second key objective of the transformation is
restructuring the ASM function so that at least while its
services are still required -- it maps to business processes
rather than to applications. This ensures that the ASM
team whether internal our outsourced doesnt lose
sight of the forest while working in the weeds. Indeed,
before long the ASM function should have aligned with
business objectives to such an extent that the team
adopts active business KPIs as its own goals.
This evolution of the function as it winds down
mirrors the evolution of the CIOs role. The days of the
CIO being judged simply on his or her ability to contain
or cut costs are over. Although that mandate remains, the
CIO today is better viewed as a valuable business partner
who given the central position of IT in todays
enterprise is a business innovator as well as an IT
costcutter.
At a time when CIOs are being told to simultaneously
cut IT spending and fuel business growth, one of the few
options for achieving this is by cutting run-the-business
spending particularly that related to ASM and
investing in change-the-business initiatives. ITs
traditional 70-30 split on RTB and CTB spending needs
to shift towards 50-50.
As the role of the CIO migrates from IT cost cutter to
business innovator, the ASM function needs to migrate
from simply resolving tickets to contributing to the
growth of the business.
Transparent engagement: HCL creates a transparent

engagement through a 24/7 visibility dashboard, a
multi-vendor governance framework, and business process-to-IT landscape visibility.
Alt-ASM has resulted in
49% operational savings delivered to a F100 global
investment bank
90% reduction in problem resolution time for a Tier-1
automotive supplier
Improvement in order management time by 19 hours
per month for a leading food and beverage company
82% reduction in critical incidents for a leading logistics
company
We believe that Alt-ASM is a game-changing and bold
approach for a function or sector of the IT industry that has
had difficulty keeping up with the pace of change.
While many IT vendors are motivated to keep growing
their ASM engagement, HCL's Alt-ASM emphasizes the
concept of proactive obsolescence,' aiming to make HCL
obsolete in these situations.
More information on HCLs ALT-ASM is available at http://microsite.

hcltech.com/altasm.
MAKING
ENTERPRISE
MOBILITY
A REALITY

companies.
MAKING
ENTERPRISE
MOBILITY
A REALITY

companies.
Issue Number 5
Issue Number 5
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