Growing Pains: Six Case Studies
Kaiser Permanente: Second Chance
By Jeffrey Rothfeder
After the failure of a long-term, $2 billion IT effort designed to centralize its mishmash of data networks, and a changing of both the CEO and CIO guard, Kaiser Permanente decided to start over again. Now, after a wrenching reorganization and the investment of another $3.2 billion in an off-the-shelf patient records system, the $28 billion nonprofit is back on track. Revenues and margins are up, and the culture wars that marked Kaiser's badly misaligned past are over—for now.
Green Mountain: Coffee Time
By Duff McDonald
When you're selling 17 million pounds of coffee a year through a network of 7,000 wholesalers and increasing revenues two-fold in five years, things can get complicated fast. So Green Mountain Coffee Roasters' most important decision was to get IT aligned with the pace of growth before, not after, the revenues started pouring in. By biting the bullet nine years ago and overspending on an expensive ERP platform, Green Mountain showed the kind of optimistic alignment that allowed it to keep growing.
Netflix: We Try Harder
By Larry Stevens
"Technology is the primary driving force" for just about everything Netflix does, says Tom Dillon. He should know: He serves as the online DVD rental pioneer's COO as well as its CIO. That dual role demonstrates the strength of the collaboration between IT and business at Netflix, which made $22 million last year, after losing $16 million just three years ago. But further growth will depend on maintaining its good customer relations and fending off the growing competition. Is its technology up to the task?
Alltech: Against the Grain
By Jeffrey Rothfeder
Alltech Biotechnology's decentralized technology strategy was doing nothing to help the midsize purveyor of organic animal feed additives meet its business goals. So the company decided to centralize as fast as possible. The strategy has generated impressive returns, but it was never designed to directly drive the company's strategic mandate. Instead, the goal was to reset the technology infrastructure to permit long-term flexibility and deflect stagnation—no matter how the strategic currents change.
Toll Brothers: Boom Towns
By Duff McDonald
Over the past decade, the last thing most home builders have been think-ing about is alignment. It would only distract them from counting their money during the long-est housing boom in the nation's history. Yet Toll Brothers, a standout even among its peers—revenues have grown 57 percent in the past year alone—finally hired George Nelson as CIO, the first in the company's history, in 2003. Since then, Nelson says, his life has been like "changing a tire on a race car without making a pit stop."
Coldwater Creek: Hot Growth from Coldwater
By Duff McDonald
Most retailers are still struggling to translate their bricks-and-mortar successes online. Yet women's apparel maker Coldwater Creek is doing the opposite. Having established a profitable online and catalog business, Coldwater is now opening retail stores at a breakneck pace: from just eight in 2000 to 175 by the end of 2005. The change in direction has exposed some alignment issues—such as inventory management and point-of-sale software updates—as IT struggles to keep up.
Expert Voices
Thomas Lodahl and Kay Lewis Redditt
With Ellen Pearlman and Edward Baker
How do you know your IT department _is making a real contribution to the business? CIO Insight asked these very questions of Thomas Lodahl and Kay Lewis Redditt, chairman and president, respectively, of CogniTech, a consultancy that works with companies to assess and improve their IT alignment. Many companies, they say, are struggling to ensure that IT makes a meaningful contribution to earnings. And in an era of growth, that can be even tougher to achieve.
Allan Z. Loren
With Edward Cone
Allan Loren has been both a chief information officer and a chief executive at some of the most storied names in corporate America. So he knows what successful technology management looks like from both sides of the fence. Loren, who retired this year as CEO at Dun & Bradstreet, and before that served as CIO at American Express, says the CIO has to take "ownership" of the business strategy in order to drive growth—and perhaps to move up to the CEO job.
Research
What's Good for Alignment Is Good for Growth
By Allan Alter
This month's CIO Insight survey brings good news: Business executives and IT executives alike agree that alignment is critically important for growth. Indeed, the same practices that help alignment, such as collaboration between IT and business and a flexible IT infrastructure, can also help companies grow. There are problems: Systems often aren't flexible enough to accommodate users, for example. But the hard work CIOs have put into alignment is clearly paying off.
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