Fast Talk: The New IT Agenda

CIOs and CTOs offer straight talk about their most strategic investments (and how they justify them).

Robert Carter

FedEx Corp.
Executive Vice president and CIO
Memphis, Tennessee

My most strategic technology bet? The Internet. That's right, the Internet. We've only scratched the surface of its power.

We keep thinking of new ways to communicate with customers. We recently launched FedEx InSight, a Web-based application that lets customers check on the status of inbound shipments regardless of who sent them; you don't need a tracking number. Basically, it allows customers to manage their own supply chain. They can sign up to be notified about delays — for instance, if their package was caged by customs on an inbound flight and they need to take action. We're always trying to maximize package visibility.

That same agenda applies to our internal operations. In June, we're launching a new handheld platform called FedEx PowerPad for 40,000 of our couriers. With PowerPad, couriers can send and receive near-real-time information and updates from any location via a wireless network. They no longer have to return to their van to upload information or refer to a manual for shipping rates.

How do I make the case for IT spending? Cost savings, for one thing. We still get nearly 600,000 calls a day to 800-GO-FEDEX. Calls that result in a tracking request cost about $2.30, and we get about 100,000 of them per day. By contrast, on FedEx.com, we're averaging more than 2.4 million tracks a day, and each one of those transactions averages just under a nickel. We're saving about $25 million a month. And best of all, customers prefer doing business with us on the Internet.

Dawn Meyerriecks

U.S. Defense Information Systems Agency
CTO
Falls Church, Virginia

My job is to use technology to reduce the risk to American lives. Everybody here, right on up to Secretary Rumsfeld, is convinced that IT has become the force multiplier in the global war on terrorism. And we're held to that expectation: The standing army today is smaller than the reserve force during Operation Desert Storm/Desert Shield. So it all comes down to the right information, at the right place, at the right time.

One of our most strategic IT investments is collaboration. Putting together the Army, Navy, Air Force, and Marines is a lot like a corporate merger. But we have four-star commanders in multiple locations, and we don't have the luxury of flying everybody to a big meeting to slog through negotiations. With collaboration, we're able to deliver more expertise, from just about anywhere in the world, to solve problems and make recommendations on how to prosecute a mission.

Consider battle-damage assessment. After a strike, we use Predator near-real-time video for our intelligence follow-up. We stream the information to multiple locations — maybe to a tent 50 miles away, maybe to a command center 2,000 miles away.

How do we measure ROI? In some ways, it's similar to how an industry does it: We charge our customer on a fee-for-service basis. But in other ways, it's not at all like business. It's hard to come out and say that the 18-year-olds under [U.S. Army] General Franks's command are safer because we provide the right IT capability. But at the end of the day, if we're not as efficient as possible in implementing technology, people will die.

Mike Prince

Burlington Coat Factory
Vice president and CIO
Burlington, New Jersey

I'm in a different position from other CIOs. This company's sales have not fallen off a cliff; they're pretty steady. So our IT investments not only react to problems, but they also create opportunities. And they all relate to better execution.

Linux figures prominently in our agenda. We are spending millions of dollars on Linux-based point-of-sale systems, and we will have roughly 5,000 of those devices by the end of the year. There's a lot of Linux on the edges of our network, but what I'm really betting on is a deepening of that: Linux in the data center.

Looking ahead, the most promising technology for retail is radio-frequency identification. E-ZPass, the tag that you put in your car to go through a tollbooth without stopping to pay, is a form of RFID. We're just kicking around ideas at this point, but there are a lot of impressive applications. If we could put a chip with its own serial number either on the price tag or the garment label, we could streamline the movement of merchandise throughout the supply chain and track what's on store shelves faster and cheaper.

That's important. The trick to being a company like Burlington Coat Factory isn't about making massive, high-risk investments — it's about maintaining a lean operation. As a discount retailer, we can't sell a garment for less than the traditional department store does unless our cost structure is better. Technology is critical for squeezing costs out of our operation and getting to the core of who we are. It doesn't fundamentally change the business, but without it, we would lose our magic.

Monte Ford

American Airlines
SVP Information Technology and CIO
Fort Worth, Texas

When I came to American two years ago, I got a clear set of marching orders from our CEO, Don Carty: Restore the company's technology leadership. There was a time when the name American Airlines was synonymous with innovation, and I think we are well on our way back there.

Don genuinely believes that technology will be one of the drivers for this company's rebound and future success. So we are focused on every opportunity to enhance productivity across the organization. And when it comes to technology, enhancing productivity means embracing simplicity.

That's why our most strategic information-technology bet is the technology environment itself. Innovation is not an event, a tool, or an application. It is an overall environment. Our goal is to exploit many different technologies to create a single, unified, easy-to-understand view of the company.

Life has gotten too complex inside American (and just about every major company). We are a large, dispersed organization with an extremely diverse workforce and 95 million customers this year. We employ more than 100,000 people. Roughly 70,000 of those people don't work in an office. They go to a hangar, a ticket counter, a cockpit, or the belly of a plane.

All told, they use hundreds of systems and dozens of technologies. Bringing all of those people together to provide a single view of the company is a daunting task. But that's the task before us. Put simply, we're focused on the hard work of simplification. We want to look and act like a single organization.

John Parkinson

Cap Gemini Ernst & Young
Vp and chief technologist
Rosemont, Illinois

We're transitioning from technology as a fashion to technology as a utility. Between 1997 and 2000, the North American economy bought 40% more technology than it needed. It wasn't entirely irrational, but it wasn't all that smart either. (I believe that the $300 billion we spent on ERP systems was the biggest waste of money in the last century.) We're still absorbing the excess.

The same questions keep coming up: How do I demonstrate that I'm making the most of what I've got? How do I demonstrate real business value from what I've already spent?

The answer? The real-time enterprise. The big bet isn't on one technology; it's on a bundle of technologies focused on creating a real-time enterprise. It will combine better enterprise integration — the glueware that links together applications inside the company — with a capacity to extend technology beyond the walls of the company, to customers, suppliers, business partners, or the market.

One example is federated data management. That is, when you ask for a piece of information — about sales, inventories, projects — you don't have to know in advance where the information is; it just shows up. Everything is working incrementally off of what's already there. The problem is complexity. We've spent 20 years automating ourselves in an increasingly complex fashion.

In general, the case for IT spending is that it must save money — fast. I mean payback within two quarters. Only about 5% of companies are habitual early adopters and support a rolling ROI model. The rest of the world is either making the case by doing more with less or by trying to significantly reduce the pain level.

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