The Role of the CIO

1. The Role of the CIO Kali Kliethermes Luke Tierney Claire Kim Jamie Young

2. Executive Summary • Skill Sets of a CIO • Organizational Hierarchy • Relationship Builder • Job Stability • Salary • Demographics • Background • Interviews • Lessons Learned

3. Introducing Our CIOs • Interviewed 3 CIOs: • Patrick McNamee, CIO, Express Scripts • Interview by Luke Tierney • Steve Becker, CIO, Graybar • Interview by Jamie Young • Jim Tom, CIO, UMSL • Interview by Claire Kim

4. What is a CIO? Wikipedia states the following about a CIO: • “The chief information officer or CIO is a job title for the head of the information technology group within an organization. They often report to the chief executive officer or chief financial officer.” • “CIO is sometimes facetiously ascribed the backronym of ‘career is over’ – implying the average tenure of a CIO is 18 months.” http://en.wikipedia.org/wiki/Chief_Information_Officer, viewed March 12, 2007.

5. Skill Sets of a CIO…

6. Skill Sets of a CIO • Effective Communication - #1 • Business Knowledge • Strategic Thinking • Leadership / Ability to Motivate • Ability to Drive Change CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/ , viewed March 12, 2007. (Sample Info: Survey was conducted between 8/11/06-8/24/06. 568 heads of IT from a broad range of industries including manufacturing (20%), medical/healthcare (12%), federal, state and local government (11%), education (10%), insurance (8%), and finance (6%). 55% of the respondents hold a CIO/CTO title, 28% hold VP/SVP/EVP of IT titles, 11% are line of business technology executives, 6% list their title as “other.” 39% of the respondents are from companies with annual revenue of less than $100M, 36% are from companies with revenue between $101M and $999.9M, and 22% are from companies with over $1B (3% did not answer this question).) Survey sample details for this source will not be repeated on subsequent slides.

7. Organizational Hierarchy • It’s important for CIO to report to CEO if IT organization is going to be aligned with business strategy, yet 59% still report to someone other than the CEO. • Organizational Structure impacts likelihood of the CIO being on the executive committee. Polansky, M., Inuganti, T., and Wiggins, S., “The 21st Century CIO”, Business Strategy Review, Vol. 15, Iss. 2, Summer 2004, pp. 29-33. Johnson, A., and Lederer, A., “The Effect of Communication Frequency and Channel Richness on the Convergence Between Chief Executive and Chief Information Officers”, Journal of Management Information Systems, Vol 22, No. 2, Fall 2005, pp. 227-252. CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/ , viewed March 12, 2007.

8. Organizational Hierarchy • Organizational Structure can also impact the IT budget • Reporting to the CEO is key! • “The days of the CIO reporting to the CFO are gone at companies who truly value the impact IT can deliver.” • Jeff Spar, Senior VP and CIO at the Readers Digest Association Polansky, M., Inuganti, T., and Wiggins, S., “The 21st Century CIO”, Business Strategy Review, Vol. 15, Iss. 2, Summer 2004, pp. 29-33. Johnson, A., and Lederer, A., “The Effect of Communication Frequency and Channel Richness on the Convergence Between Chief Executive and Chief Information Officers”, Journal of Management Information Systems, Vol 22, No. 2, Fall 2005, pp. 227-252. CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/ , viewed March 12, 2007.

9. Relationship Builder • Must be able to sell their ideas internally • CIOs can become unpopular - often forced to say “no” to other business units as a result of limited resources and budgets. • Must have excellent “soft” skills – relationship management / persuasive communication Raths, David, “CIO to CEO”, Computerworld, December 18, 2006, pp 27-28. Fowler, Julia, “The Right Ideas for a Bright Future”, Computer Weekly, January 16, 2007, pp. 22-23.

10. Average Time on Job for CIO?

11. Job Stability • Big Risks – high turnover rate, but improving • Average time on the job for CIO is now between 5 and 6 years • Has increased since 2004 • Is shorter at large companies than at small/medium size companies. • In fact, CIOs may be gaining on other CXO positions from a stability standpoint Alter, Allan E., “CIO Role Survey April 2006: Achievement is the Issue, Not Survival”, CIO Insight, Ziff Davis Publishing Holdings, April 6, 2006. http://www.cioinsight.com/article2/0,1540,1963698,00.asp, viewed March 12, 2007. Source for the statistics in this article is a study by SpencerStuart. SpencerStuart is “one of the world’s leading executive consulting firms.” The firm conducted the study across 25 countries by partnering with clients including Fortune 500, mid cap, and emerging growth companies. CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/

12. Salary • For taking big risks, they make big $$ • The larger the company, the larger the salary • Also varies by industry • Retailer / Insurance – highest salaries • Government / Education – lowest salaries CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/, viewed March 12, 2007.

13. Demographics • According to CIO Magazine’s “State of the CIO 2007” Survey: • 85% of CIOs are male, and 15% female. • According to a CIO Insight Research Study: • Average Age - 47 • Average Hours of Work Per Week - 53 CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/, viewed March 12, 2007. Alter, Allan E., “Meet the Hybrid CIO: Well-Paid and Powerful”, CIO Insight, Ziff Davis Publishing Holdings, April 5, 2005. http://www.cioinsight.com/article2/0,1397,1785600,00.asp , viewed March 18, 2007. (Sample Info: Conducted between 1/31/05 through 2/18/05. 405 respondents who identified themselves as their company’s top IT executive. Of those 405, 205 were from companies with 2004 revenues below $100M, 159 were from companies with revenues between $100M and $999M, and 41 were from companies with revenues over $1B. Survey sample details for this source will not be repeated on subsequent slides.

14. CIO Backgrounds… More Business or More IT?

15. Background • Business Knowledge • IT is primary area of experience (65%) • 9% have only business experience • 26% have a combination of experiences CIO Magazine’s “State of the CIO Survey”, CXO Media Inc, 2007. http://www.cio.com/state/, viewed March 12, 2007. Alter, Allan E., “Meet the Hybrid CIO: Well-Paid and Powerful”, CIO Insight, Ziff Davis Publishing Holdings, April 5, 2005. http://www.cioinsight.com/article2/0,1397,1785600,00.asp , viewed March 18, 2007.

16. CIOs: Up Close and Personal • Interviewed 3 CIOs: • Patrick McNamee, CIO, Express Scripts • Interview by Luke Tierney • Steve Becker, CIO, Graybar • Interview by Jamie Young • Jim Tom, CIO, UMSL • Interview by Claire Kim

17. Company Comparison

18. Corporate Overview

19. Corporate Overview One of America’s largest pharmacy benefit managers dedicated to making the use of prescription drugs safer and more affordable. Covers over 50 million members and their families.

20. Key Corporate Facts Operational and Financial Overview • 14,000+ employees • 57,700 participating pharmacies nationwide • Home Delivery: 39.1 million prescriptions • Participating Pharmacies: 398.8 million prescriptions • Specialty Drugs: 3.5 million prescriptions • Generic Drugs: 58% of all prescriptions dispensed • $17.66 billion in revenue in 2006 ($16.3 billion in 2005

21. Key Corporate Facts Rankings • Rank 134 on Fortune 500 list • Information Week’s 500 Most Technologically Progressive Companies • NASDAQ 100 Subsidiaries • CuraScript — one of the largest, independent specialty pharmacy services companies in the U.S. • ESI Canada — provides PBM services to 5 million Canadians

22. Corporate Overview Specializes in supply chain management services and is the leading North American distributor of high-quality components, equipment and materials for the electrical and telecommunications industries.Established in 1869, Graybar procures, warehouses, and delivers just about any kind of electrical or communications and data product, component, or related service to its customers. It stocks and sells hundreds of thousands of items from thousands of manufacturers.

23. Key Corporate Facts Operational and Financial Overview • 8,000+ Employees • Privately-held and Employee-owned • $5+ Billion in sales in 2006 • 250 distribution centers throughout the U.S., Canada, Mexico, and Puerto Rico

24. Key Corporate Facts Rankings • #462 on the 2005 Fortune 500 ranking of America’s largest companies • On the Fortune America’s Most Admired Companies list for the fifth consecutive year (2005) • #50 on Forbes’ 2006 ranking of the 500 Largest Private Companies • #12 on the National Center for Employee Ownership’s Top 100 rankings 2006) • On the InformationWeek 500 list of companies with the best technology and business practices for the fourth consecutive year (2005)

25. Key Organization Facts The University of Missouri–St. Louis is one of four campuses in the University of Missouri. Established in 1963, it is the newest campus and as of 2005, it is the largest university by enrollment in the St. Louis area. http://en.wikipedia.org/wiki/University_of_Missouri-St._Louis, viewed March 12, 2007.

26. Key Organization Facts Established 1963 Chancellor- Dr. Thomas F. George Faculty- 1,046 Staff- 1,199 (Fall 2005) Students- 15,548 (Fall 2005) Undergraduates- 12,594 Postgraduates- 2,954 Campus-Urban, 300+ acres http://en.wikipedia.org/wiki/University_of_Missouri-St._Louis, viewed March 12, 2007.

27. CIO Background

28. Pat McNamee, CIO & SVPExpress Scripts, Inc. • Joined ESI in 2004 with over 20 years of technology and general management experience.

29. CIO Background Professional: Educational: Bachelor’s Degree in Biomedical Engineering (Marquette University) Master’s Degree in Electrical Engineering and Computer Science (Marquette University)

30. Steve Becker, CIO & VPGraybar Electric, Co • Steve has a bachelor of science degree in Marketing, with a minor in Accounting from the University of Colorado. • Steve joined Graybar in 1976 as a shipping clerk after college. • He has 31 year of business experience mostly on the operations side.

31. Dr. Jim S.C. Tom CIO & Associate Vice Chancellor of Information Technology • Dr. Jim S.C. Tom

32. CIO’s Background Wide Educational background: • B.Sc. Physics, Univ. of British Columbia, Vancouver, Canada • M.Eng. Systems Engineering, Carleton University, Ottawa, Canada • Ph.D. Engineering-Economic Systems, Stanford University, California

33. CIO’s Background Broad work experience: • Programmer/analyst -- Transport Canada, Ottawa, Canada • Management policy analyst -- National Oceanic and Atmospheric Admin, Miami, FL • Economist-statistician -- Statistics Canada, Ottawa, Canada • Manager, Strategic Planning -- Imapro Corp, Ottawa, Canada • VP Research and Engineering -- Imapro Corp, Ottawa, Canada • Director, Networks -- University of British Columbia, Vancouver, Canada • Chief Technology Officer -- University of British Columbia School of Medicine, Vancouver, Canada “The consistent theme has been trying to figuring out ways you can use technologies to enhance business, whatever that business might be whether it is in engineering or universities.” - Jim Tom

34. Organizational Hierarchy

35. Executive Reporting Structure at ESI “A successful leader is not bounded by reporting relationships. What matters instead is the ability to establish a clear vision and an optimized strategy along with a plan that is then socialized across the organization to gain the support necessary to drive positive change.” -Pat McNamee

36. Executive Reporting Structure at Graybar Electric, Co

37. Reporting Structure at UMSL Dr. Jim S.C. Tom

38. IT Overview

39. IT at ESI Overview • 2006 Annual Budget: $226 Million • Full Time Employees: 890 • Contractors: ~ 300 • Operating Scope: 2 countries (U.S. & Canada), 26 sites

40. Overview of IT at Graybar • IT group made up of 215 professionals • 43 professionals involved in requirements definition, business alignment, user support, and testing • 69 technologists in the development group with skills in ABAP, Web Applications, Applications Messaging (EDI, Workflow), Business Warehouse • 103 technologists in the infrastructure group supporting mainframe, UNIX, Microsoft, Novell networking, Oracle databases, SAP Basis, etc.

41. Graybar IT Continued… • Approximately 10,000 combination desktops and laptops. • Roughly 500 servers managed by only three individuals. More about this later in outsourcing section. • 2006 Annual budget was $47.5 Million ($48 Million in 2007)

42. IT at UMSLOverview • About 80 people work for CIO • Type of services provided: - Services that support teaching and learning labs, classrooms, myGateway. - Basic services emails, network, telephone systems, infrastructures in datacenters, and web servers. • 2 Datacenters • Budget Around 10 million Come from technology fees , regular central funding,

43. Top 3 Priorities

44. Top 3 Priorities at Express Scripts • Assure system reliability • Define and deliver innovative applications that drive growth or increase productivity • Develop talent for use within IT and across the business

45. Top 3 Priorities at Graybar • People: Retention of good skilled employees. • Graybar’s continuous improvement strategic initiative to reduce cost, eliminate waste and improve business process. • Technology and ways to move the business forward and make us stand out from the competition. Manage enablers.

46. Top 3 Priorities at UMSL • Enhancing the support of the academic mission to improve teaching, learning and research • Compliance issues - concerns about complying with health care information. • Hiring and keeping good people and getting a better hand on security.

47. What Keeps a CIO Awake at Night?

48. What Keeps the Express Scripts CIO Awake at Night? • “Worrying that IT is not doing everything it can do to help our business win and that we can never most fast enough if we want to win in the marketplace.” –Pat McNamee

49. What Keeps the CIO of Graybar Awake at Night? Not much on a regular basis. Occasionally, a big projects may keep him up at night. Why does he sleep so well? • He has extraordinary faith in his team.

50. What Keeps the UMSL CIO Awake at Night? The main issue that keeps him at night is staffing. • Non-competitive salaries due to under-funding. • A lot of choices for jobseekers in this metropolitan region. • Turnover rate has been stable but recruitment has been difficult.