CIO Paul Johnson: Investing in a Down EconomyBy Edward Cone | Posted 02-16-2009
CIO Paul Johnson: Investing in a Down Economy
Paul Johnson has a plan for getting through tough times. It looks a lot like the plan he had before tough times hit.
That's not to say that Johnson, the veteran CIO of financial services company BB&T, isn't tightening his belt and resetting some priorities. But the Winston-Salem, N.C., bank is healthier than many of its rivals, and Johnson sees the chance to widen the gap during the downturn and accelerate into an eventual recovery.
To do that, he's sticking with the strategic vision set in 2007, which calls for an IT transformation project to support BB&T's transition from an acquisition-driven company to one that focuses more on the organic growth of its business lines. CEO John Allison IV, who retired at the end of 2008, turned a once-sleepy small bank into a regional powerhouse with assets of some $137 billion by gobbling up 60 banks and thrifts, along with scores of insurance agencies and non-bank financial services companies.
Johnson's job is to remake his organization from a traditional cost center to a value-generation center that is closely aligned with current business priorities and customer needs. The goal, he says, is to spend a third of his time on traditional jobs ("keeping the lights on and the doors open"), a third reacting to the needs presented by the business and a third on projects that generate competitive advantage. A big part of the portfolio involves serving customers, who expect excellent online service and security.
Thus, a big multiyear investment in network infrastructure, which Johnson expects to generate about $100 million in savings in the next five years, is proceeding on pace. The IT services budget for 2009 shows a double-digit increase over 2008; aggregate IT costs, which reflect efficiencies gained over time, will not rise as sharply.
Johnson is investing with care, mindful that rapid return on investment is a priority. "We have more of a short-term focus on generating as much value as possible in 2009 and probably into 2010," he says. "There are projects where we say that if you can't do it quickly, you don't do it now."
BB&T has what Johnson calls "a very disciplined methodology for the submission and approval" of projects, with a traditional emphasis on ROI, often in the two-to-five-year range. Now, though, he says, "The strategic project pool is narrowed to things that will give us value in that period. There are some things we would have gone after at broader scale if we had more money, but I can't think of anything that we're not doing at all."
Johnson works closely with executive management, and his interactions with them contain few surprises. "I've always got to have a good business case when I go to them," he says. "I can't say it's the right thing to do because the technology is better or the architecture is better. I'll lose that argument every time." That certainly has not changed during the downturn.
However, the recession has had an impact on Johnson's messaging to his own staff: It's become the focus of one of the regular town hall meetings he holds with all IT managers. "To ignore the economy is to evade it," he says. "You have to talk about what's happening, to help people understand how BB&T is doing in this economy." Johnson is always mindful of the fact that his people and their families may be affected by events outside the company.
Good communication is a hallmark of BB&T, he says, but these are unusual times, and Johnson has a special message for his people: "I want them to know that to control our own destiny, we have to execute at a high level. They need context, to see that we are on a growth trajectory, that we're on the attack and we'll take opportunities where we can. Now is the time to take advantage."