Change: Love It or Leave

Whether you work at an insurance company or a clothing manufacturer, have a reduced budget or more money than you can get around to spending, you have to crave change if you want to make it as a successful CIO.

That was a consistent message last week at a high-powered gathering of CIOs at a San Francisco meeting of the Churchill Club, a Silicon Valley business and technology group.

“We have to be change agents and look outside the IT hole,” said David Bergen, Levi Strauss & Co.’s CIO. “If you don’t like change you won’t survive in the CIO’s role.”

Fireman’s Fund Insurance Co. of Novato, Calif., takes that notion of CIOs and change so seriously it’s given CIO Fred Matteson the additional title of chief transformation officer. “I think it’s the same job,” Matteson commented.

Marty Chuck, CIO at Agilent Technologies put it this way: “I’m a change junkie.”

It all means that 2005 should be a good year, as CIOs are expecting plenty of change — in challenges, priorities, methods and budgets. Some CIOs said they’ll focus on security issues while others are backing emerging technologies such as RFID and IP telephony.

“A big hairy goal (I have) this year is to give 10 million hours of productivity back to the business,” said Agilent’s Chuck. One way he’ll be doing that is by introducing Six Sigma, an efficiency-boosting and waste-reduction system most frequently used in the manufacturing industry, into the IT department.

New-found efficiencies will help Chuck trim Agilent’s IT budget in 2005, while Levi Strauss’ Bergen is expecting an increased IT budget in the coming year. Bergen and others extolled the virtues of using IT to save money throughout the company, and then to feed those savings back into appealing productivity applications. “We drive cost down so we can spend on discretionary applications,” said Bergen.

This year, Bergen will spend plenty to install RFID (radio frequency identification) systems so that the blue-jean maker can comply with RFID standards of major retail chains such as Walmart and Target. RFID “does very little for us” right now, Bergen said, but added that Levi Strauss plans to develop an RFID infrastructure so that the San Francisco-based company can take full advantage of RFID’s capabilities in the future.

Microsoft Corp. will also be spending on RFID this year, as well as on improvements to its on-campus wireless Internet-access infrastructure, said Microsoft CIO Ron Markezich. The firm is also looking to spend on IP telephony, Markezich added.

Expressing a unique CIO challenge, Markezich said Microsoft has trouble spending all the money it sets aside for IT each year. “I’ve never spent my IT budget,” Markezich said. “At the end of the year we’ll be $20 million to $30 million under budget. I get pressure that we don’t innovate enough.”

Whatever their budget, all the CIO panelists talked about a 2005 emphasis on network efficiency and security.

“We’re focused on security going in to 2005,” said Levi Strauss’ Bergen, who added that the firm feels confident about its network security vis-`-vis outside intruders, but is less well protected from internal, employee disruptions to the network.

Microsoft’s Markezich agreed that many companies have focused on protecting their networks from exterior threats without paying the proper attention to the harm that can be done by network users inside the corporation. The Redmond, Wash.-based firm employs 57,000 but some 90,000 people have authorized access to Microsoft’s internal network he said, adding “Not every one of them is a good person.”

Along the same lines, Agilent will continue its fight for e-mail security and efficiency. “Spam is absolutely a huge issue,” said Chuck, estimating that 80% of all emails received at Agilent are spam.

While looking forward to more changes in 2005, the CIOs noted that one thing about their jobs hasn’t changed enough: the speed of software development. While microprocessors have gotten significantly faster each year, software development has not kept pace, the CIOs noted.

“It’s still really hard to build an application,” concurred Matteson of Fireman’s Fund, which has a modest IT budget of about three percent of annual revenues.

When you have a software application to write, “can you do it five times faster than you could five years ago?” Bergen asked. “I don’t think so.”