CIOs shift focus to process improvement

CC: Do you see your role as a contributor to business strategy?

BHANDARI: I see my role as both technology officer and business strategist, leaning more toward the latter. That means engaging with the business, understanding the business challenges and coming up with solutions. And they may not necessarily be technology solutions.

LLOYD: I’m very much the same in terms of looking at the accountability of the ongoing management of technology, but more so becoming ingrained in the actual strategy of the company. In December, we sat down and really looked at the business and asked where do we need to be. We actually brought a number of staff involved in technology into those meetings. That really started to change the conversation. It wasn’t business only, it was a collective conversation.

MAULUCCI: Again, it’s a dual role. There is the one side where you are just trying to keep the plumbing running, and that’s not the glamorous part of the role. On the flip side, it’s business strategy. It’s expected of me to go out to seminars and bring back ideas. I am meeting with the executive team on a fairly regular basis and talking about what I have seen and what is new.

CC: How does what you are doing now compare with what you were doing five to 10 years ago?

BHANDARI: If I had to go back five years, the challenge of that time was keeping the lights on. That’s how IT functioned. I came in not because of my technology skills but as somebody who could help the business with technology. We have very deliberately shifted our focus toward trying to understand the business and keeping the lights on at a cost-effective price. This has meant IT has had to focus more on business priorities and understand mining-related problems.

LLOYD: It’s also about the size of the company. In a smaller organization, you wear many different hats and you don’t even draw a line where business and technology meets and ends. In larger organizations, you see more of a philosophy where technology individuals are embedded in the business side. You have more cross-pollination.

MAULUCCI: The biggest change in our company in the last 10 years? I doubt if there is a single process in our company that doesn’t rely on technology in some way. Anything you want to change or any process improvement involves us, so the communication has to be there every day.

CC: How did you make the transition from just managing IT into more of a business function?

BHANDARI: It’s also a process of maturity. If IT does not keep the lights on in a reliable fashion, then they are not in a position to engage the business in a conversation about strategy. You have to earn your stripes.

MAULUCCI: Technology really has not been around that long. Now the stuff has matured and there are a lot of new tools. It actually gives me a congested feeling in my heart: Am I actually able to absorb them and am I going to pick the right ones?

LLOYD: That’s where understanding the business comes into play. We are hit by a barrage of technology. Just look at the number of journals and research firms and suppliers. We are inundated. So unless we have a very strong foundation of what the business is trying to accomplish, we have no way of rationalizing which technologies at the end of day are going to give us the strongest competitive advantage.

CC: How were you able to build relationships with those on the business side?

LLOYD: I work directly with the CFO and other executives. We sit at the same table and I have a fair amount of individual time with the CEO. We have earned the right to be there, to talk about the business credibly. We can think about the problems coming to us in business terms and then we can have a technology team behind us to execute.

MAULUCCI: I’ve been with the company 15 years – a long time in IT terms – and most of the people or vice-presidents are personal friends. Very little of the communication is happening through formally scheduled meetings, it’s passing in the hall and there’s lunches. Building those strong relationships makes it a lot easier to stay in tune with what is going on.

BHANDARI: For me it’s a bit of a challenge because of the nature of the company. We have operations in Indonesia so I can’t build relationships sitting here. I have to go there once or twice a year. I also have a global services group, who are really business analysts. They are the ones who represent IT to the business and understand business needs.

Later this week we are going through the 2007 operating plan. We look at the amount of money they are spending on new projects and lining that up with the business strategy. The reason I will be there is to ask the question: Should we be spending more money on asset management or on planning processes?

CC: More and more CIOs are involved in process improvement. Some of you have even said you have a passion for it. How is that?

MAULUCCI: Let me first explain why I feel the passion. If we don’t own the land and we don’t own the business, then what do we own? We own a process that allows us to convert a piece of land into a finished product that allows us to create a lifestyle for people. Our whole core value is our ability to execute a process and to execute it well. That’s why I feel the passion. Improving the process is improving the core asset. Process mapping is first understanding what you are doing currently, analyzing it to take out the inefficiency, taking that process so that it is ingrained in the business and then starting over again when you are done. Then bring in as many people as you can, using as many technologies as possible.

LLOYD: I look at it very much from the services point of view. It’s really about understanding things like business process modeling, how business not only flows within groups but across groups. Why have eight different AR functions for eight different groups? I look at business processes, what actually adds value and what I can get rid of, then unleashing whatever appropriate technology solves the business problem. If we can pull stuff out, that is the key for me.

BHANDARI: Mining is a complex process. We take dirt out of the ground, and what comes out is nickel pallets or nickel bars or nickel powder, which has different industrial uses. You dig for it, grind it, mix it with different liquids, refine it and create a finished product. It’s a very asset-

intensive process requiring human labour and automation. Process improvement either makes the process more efficient, takes out the waste, eliminates, rationalizes (or) automates. The other thing is process effectiveness where you do things differently.

CC: Do you have examples where this has occurred?

BHANDARI: An example is when you invite a lot of bids from suppliers and you choose a vendor. You take that process, turn it upside down using technology. For example, we use reverse auctions. We are in an electronic marketplace for certain things. We set some parameters and we let them bid, and the bidding goes downwards. This is done in certain time frames (with) certain rules. We’ve done this for leasing different equipment in our Ontario operations, and for leasing desktops and servers in IT. We have saved millions of dollars. I really get excited when you talk about process effectiveness because the savings are amazing.

MAULUCCI: There actually are a lot of examples of where we put technology in and it has completely changed the way we work. We have an initiative underway called zero-invoice. We are trying to reduce the number of invoices coming in and change the construction industry to work more like an auto manufacturer. Before, they would ship an invoice right after they shipped the materials. We are creating electronic connections system to system, so at the end of the month, we pay based on the basis of completion and pre-negotiated rates. We have removed an incredible amount of paperwork. No invoices are flowing, the matching is done electronically and that is changing the model for how we want to deal with every supplier. The value is there. Using paper, it costs $20 to process an invoice. We do 55,000 to 60,000 invoices a year. That is hard ROI.

CC: You have processes that have been around a long time – in the case of the mining industry, 100 years. Where do you find these opportunities?

BHANDARI: Every company is under pressure to either contain or lower their costs. Our business is cyclical and we really don’t have control of the price. It’s supply and demand. It’s absolutely critical we keep our costs low and we have to look at everything. Surprisingly, the people in operations who have intimate knowledge of costs are the lowest rung of management, whatever the type of gloves you use. To answer the question, they are driven by the need of the operations managers to reduce costs and then you need a leader who is capable of getting the troops excited and giving them the mandate to come up with solutions.

LLOYD: The cost side is obviously very important but I also look at the opportunity side of using technology to drive revenue – i­­f we can come up with a deployment that takes two days instead of two weeks, and we can use technology to help with that. I always ask the question: And why are we doing this?

MAULUCCI: The other thing that is critical is having an organization that is willing to change. There is a quote that I use a lot: Einstein said insanity is doing the same thing over and over again and expecting different results. It’s just obvious that you have to change, and as much as it sounds so simple, so many organizations don’t lock on to that. People resist change and that is the biggest hurdle to all of this.

CC: Take a technology like document management and the potential to take paper out of the process. How do you apply this?

MAULUCCI: A lot of it is in steps because it’s all different parts of the organization using documents in different ways. The first piece is the legal side. We automated the heck out of it, the documents involved (in) the closing of condominiums. It was a big pain point and ROI driver. Document management is now stepping into places where the ROI is not as dramatic across the board – construction contracts,

correspondence with purchasers, that type of thing. If I look at all the different industries and all the different places I go, it is the key, especially in the legal community. Everybody has a dream of a single, flexible document. Huge values are being driven by that.

BHANDARI: For us, it has been very interesting. When we are spending money on building new operations, the team may need an outside contractor, internal technology people in Mississauga (and) operations people in Sudbury, so they need access to certain documents for them to collaborate together. It is very important for them to get to these documents in one place. It almost became a requirement that we have a document management system, and this idea has been embraced by our capital projects group, who put in the discipline to use it effectively. We have a challenge to have the same rate of adoption in our administrative groups because people are used to doing the same thing, that is, saving stuff on their C drive. We have multiple versions of the truth rather than a single version. In IT, we are changing our behaviour and processes so we can use document management. In the end, you should be able to search across multiple servers without knowing where they are located.

LLOYD: We probably do it in a small way. We also use less expensive tools such as public folders and basic share technologies so that at least we are starting at the same point.

CC: When you implement technology on the business side, what is the biggest stumbling block?

MAULUCCI: The biggest challenge is how do you make people do something different? They have to choose it on their own, so all you can do is create an environment that allows them to choose it on their own.

BHANDARI: It just can’t be one strategy. If you are sending me an attachment, then you are not using the document system. If you are sending me a link, then you are. So you kind of promote that use, make it easier for them, find the real reasons they are not using it, and on and on. It’s a tough spot.

CC: Why is it the CIO needs to be telling people to share their documents?

BAHNDARI: Can I ask a question? Who is in the best position to ask that question? Once you ask the question, you have stated the problem. There is nobody, with the exception of the legal department, who will take the responsibility for document management.

LLOYD: At the end of the day, the CIOs are custodians of that information. And that is why it falls to us. We spent most of our careers taking all these different data sources – structured and unstructured – and putting them together to create knowledge and to provide insight into what all the different groups are doing. If my CEO is worried about document management, then I’m worried about this organization. I want him to be worried (instead) about strategically where the business is going.

MAULUCCI: I see that as definitely a role in my organization – that is, getting people on the same page. We cross the boundaries of everything. We work closely with everyone.

BHANDARI: I think of information technology as the glue for all these things and all these disparate groups to get together. And sometimes, when there is a corporate-wide problem and there is no ownership, (the) CIO is the best person to solve the problem.

CC: Looking ahead, how do you see the role of the CIO evolving?

BHANDARI: I see far more engagements with business and far more ability to influence business strategy, and for the right reasons. IT will have far more understanding of business processes and business issues. Over time, it will be less about technology and more about process.

LLOYD: I see the role itself moving closer to business while translating those needs into technology strategy and vision. The CIO’s role, in my mind, will always be focused on de-mystifying the many technology options and how they can be used to drive advantage.

MAULUCCI: I think the role of the CIO is changing from providing the basic infrastructure of the network and e-mail to a role of introducing new technologies to support the business strategy. Innovation is at the core of every successful business and as technologies change at a rapid pace, it becomes a source for innovation to differentiate and create business value. As an example, I was at a technology conference this past spring and picked up on a new trend called “intelligent building”. (This) involves creating an IP-based building network that can be leveraged to lower costs through convergence of wiring systems. This building network can then enable new technologies to create a unique experience for people in the building.

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