What CEOs Want From CIOs 2009 Strategy Series

“What CEOs Want From CIOs” 2009 Strategy Series for Executives SIM Memphis Chapter February 26, 2009 Mark Polansky Senior Client Partner & Managing Director Information Technology Officers Center of Expertise Korn/Ferry International

Korn/Ferry Human Capital Solutions • Executive Search – Matrix of Industry/Sector & Functional Practices – IT Practice: CIOs, CTOs, CISOs, SVP/VPs • Futurestep – Recruiting & Staffing Planning – Project/Pipeline Recruiting & Staffing – Recruitment Process Outsourcing • Leadership and Talent Consulting – Organizational Development – Individual & Team Assessment – Competency-based Modeling – Executive Coaching & Development – Compensation Consulting 2

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor – Accounting automation – Electro-mechanical equipment, early computers – Reports to Accounting Manager 3

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor • 1960 s – Data Processing Manager – Proprietary systems - accounting, payroll, sales – Batch mainframe computers – Reports to Accounting Manager or Controller 4

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor • 1960 s – Data Processing Manager • 1970 s – MIS Director – A full array of business applications systems – Online and database systems, minicomputers – Reports to Controller or Chief Financial Officer 5

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor • 1960 s – Data Processing Manager • 1970 s – MIS Director • 1980 s – Vice President of Information Systems – Alignment of IT with business functions – PCs and Local Area Networks, decentralization – Reports to Chief Financial Officer 6

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor • 1960 s – Data Processing Manager • 1970 s – MIS Director • 1980 s – Vice President of Information Systems • 1990 s – SVP/EVP & Chief Information Officer – Enterprise integration, recentralization – Client/server, Internet, ERP systems – Reports to CEO/COO/President/GM - senior management team 7

Evolution of the IT Leadership Role • 1950 s – Tab Supervisor • 1960 s – Data Processing Manager • 1970 s – MIS Director • 1980 s – Vice President of Information Systems • 1990 s – SVP/EVP & Chief Information Officer • 2000 s – ? ? 8

The IT Leadership Role in the 21 st Century • 2001 -2002: End of the Technology Bubble – Dot-com implosion – Deep corporate IT cost cutting – Focus on tactical operations post-Y 2 K/ERP • 2003 -2007: “The 21 st Century CIO” – – – Comprehensive definition of the “C-level” IT role Strategic alignment and governance Process & operational optimization/ERP Business intelligence and customer intimacy Value creation • 2008 -2010: Dealing with Global Recession – Cost management, modest budget & staff reduction – “ 21 st Century CIO Agenda” still a mandate 9

“The 21 st Century CIO Leadership Agenda” Source: Korn/Ferry research 1. IT Strategy – Business strategy alignment, business case and projected return on investments, priorities versus resources 2. IT Governance – Portfolio management, IT investment funding and review process, performance measurement, project management (PMO), SDLC, processes, standards, procurement 3. IT Organization & Staffing – Centralized, decentralized, federal model, shared services; reporting relationships, FTEs, staff augmentation, on/near/off-shore, capability/maturity, training 4. Technology – Architecture; bleeding/leading edge or trailing; build or buy, suite or best-of-breed; infrastructure and networking insourced/outsourced, total cost of ownership (TCO), support 5. Technology Awareness – Board of Directors, senior and middle management, rank and file 10

“The 21 st Century CIO Leadership Agenda” Source: Korn/Ferry research 6. Corporate Governance – Compliance, disaster recovery, business continuity, security, privacy, intellectual property protection 7. Business Intelligence – Data modeling & warehousing, metrics, analytics, forecasting & modeling 8. ERP – Business integration, value chain, process improvement & innovation, change management, quality programs 9. Customer Care – Customer relationship management (CRM), contact centers, customer portals, B 2 B collaborative computing (EDI, VMI, CPFR) 10. Internet – e-business strategy, portals, web-enabled applications, telecommunications [Web 2. 0] 11

“The 21 st Century CIO” Strategic “competitive” ENABLER DRIVER SUPPORTER COST CUTTER Tactical “operational” Proactive “leading” Reactive “following” 12

Present State of the IT Leadership Role • 2008 -2010 – Dealing with Global Recession – Operating charter o Leadership o Cost Management o IT Governance & Risk Management o Change & Innovation – Success criteria o IT Effectiveness o Value Creation o Transparency & Measurement – Upward mobility to operations and general management

What CEOs Want From CIOs • Leadership – – – Assertive leadership and responsible ownership Enterprise/SBU-level business savvy and strategic skills IT alignment, strategy, vision, inspiration and motivation Communications, relationship & partnership skills Global perspective and optimization o Global business processes, standards & support o Use of global resources – sourcing & production – Go beyond IT and the CIO’s comfort zone – Attract, develop & retain “best athletes” (The War for Talent) – Execution, execution! Ø Create World Class IT/Business Functionality

What CEOs Want From CIOs • Cost Management – Do more with existing resources o Organizational restructuring & right-sizing o Financial restructuring – the 80/20 paradigm – Cost reduction & operational optimization o IT standards and processes o Systems consolidation and integration o Alternative/optimum sourcing/outsourcing o IT operations: automation, virtualization, ITIL, COBIT o Vendor contracts: consolidation & renegotiation Ø Potential Funding for Low Risk/High Return Initiatives

What CEOs Want From CIOs • Governance & Risk Management – IT standards, processes and controls – IT architecture for agility and growth/scalability – Quality programs - PMO, Six Sigma, CMM – Data security, privacy and retention – Systems and data protection - internal and external – Support for compliance and audit – Disaster Recovery and Business Continuity Planning Ø Protect the Enterprise and Position for Future Growth

What CEOs Want From CIOs • Value Creation - Drive the top and bottom lines – Improve revenue, margins, market share – Business intelligence, analytics and insights – BPO - enhanced productivity and competitive advantage – Customer intimacy, loyalty, segment marketing, etc. – Communities, markets & social networking - Web 2. 0 – Technological innovation – New products and services – New channels and markets – New business models Ø Change & Innovation

“The 21 st Century CIO” Strategic “competitive” ENABLER DRIVER SUPPORTER COST CUTTER Tactical “operational” Reactive “following” Proactive “leading”

Change & Innovation = Business Transformation GAME CHANGER DRIVER Business Transformation Proactive Strategic Reactive Strategic Products & Services Innovation Products & Services Maintenance ENABLER Reactive Tactical COST CUTTER SUPPORTER Proactive Tactical IT Consolidation & Rationalization; Vendor Partnerships IT Maintenance; Outsourcing

Innovators & Game-Changers • • • American Airlines – SABRE, AAdvantage Citibank – ATM Deployment Fed. Ex – Parcel Tracking Toyota – Just-in-Time Manufacturing Dell – Zero Days Inventory Wal-Mart – Supply Chain, VMI, CPFR, RFID Proctor & Gamble – BI & Consumer Communities Amazon. com – Online Retailing e. Bay – Online Auctions Google – Search-based Advertising Facebook, You. Tube, Twitter, Linked. In – Social Networking You!