1. Getting IT Right Team Black Keith Burgess Khaled Elamrawi Gopal Ganesan Greg Hinzmann Blake Kashiwagi

2. Agenda Introduction & Overview Long-Term IT Plan A Unifying Platform High performance IT culture Insights

3. Introduction IT is an expensive mess in many firms  20% of IT budget failed to meet objectives  Amounts to $500 billion of waste worldwide Why is it this way?  Lack of senior management involvement  IT support is independent and not linked to systems integration.  High maintenance costs  Inconsistent designs leading to more spending to create interfaces  No focus on the root cause  IT organizations are complex

4. Overview Thoughtful attention and high expectations of senior managementMotivated people “Three Gears”  Take a long term strategic view of IT  Create a unifying platform to slash redundant costs  Cultivate a high performance IT culture Non-technical people need to understand IT discussions

5. Long-Term IT Plan Long-term disciplined, strategic view with a sole focus on achieving the firm’s fundamental goals Rapid pace of technological advancements  Wise adoption of new technologies  Balance need to develop or sustain a competitive advantage versus overhead of deploying new technologies 1

6. Long-Term IT Plan >> Frito Lay Core competencies  Purchasing, production and distribution leverages nationally  Local resources for marketing and sales to give regional speed Reorganized to a hybrid structure  Accounting, purchasing, manufacturing and distribution centralized.  Sales and marketing decentralized 1 IT Strategy  Digitally reconnect the company’s nervous system  Access to real time information using handheld devices increasing efficiency and operating results  Funded by decreasing SGA by 1 cent per dollar of sales. Company outgrew its IT infrastructure  No adequate IS infrastructure in place

7. Long-Term IT Plan >> Frito Lay Results  Increased sales from 3 to 4.2 million in 3 years(86-89)  Reduce costs  $40 million savings due to better control over sales data  Reduction of 30,000 to 50,000 hours of paper work per week 1

8. 2 Create A Unifying Platform Develop a consistent set of methods, technologies and management disciplines  Make information readily available to those who need it in a reliable manner  Planning of the transition to a unifying platform is required to reduce risk of implementation issues

9. 2 Complex IT systems  Lack of systems integration >> Delta IT Strategy  Build an IT organization that speaks a common language What they did  Refocus decentralized investments to build a unified IT architecture called the ‘Delta Nervous System’  Built a new set of middleware that talked to all individual systems and helped talk with each other.  Reduced risk through a phased approach of decommissioning old systems Results  Reduction in IT costs by 30%  Revenue enhancement of $2million due to increased customer satisfaction. Create A Unifying Platform

10. 3 Build A High-Performance IT Culture Build close relationship between IT and the business  Establish an accountable IT leadership team.  Create a shared mission.

11. 3 Build A High-Performance IT Culture Challenges:  How would people react to deadline pressure?  How would teams work together?  How would the overhaul of systems be done?  How will talent be developed continually? Firms had different cultures, different performance characteristics and leadership styles:  Santa Fe: tough and strictly hierarchical  BN: Kind, collaborative and soft on accountability >> BNSF Business Goal: Develop a integrated real time system to track 33,500 miles of track Created a simple structure: (CIO, VP and directors) was formed with performance and bonus targets set as the rest of the organization

12. 3 Build A High-Performance IT Culture Results  Achieved $500m of cost savings  Beat the 24 month schedule by 3 months  Resulted in healthy work patterns and set the tone for the future >> BNSF

13. Insight >> Bush Boake Allen Needed a Long Term Plan  Integrate Project Mercury with strategic goals  Robust dialogue about the project Unifying Platform  Project Mercury is a stand alone system  No mention of integration with information system

14. Insight >> Alibris Needed a Long Term Plan  Evaluate continued use of Thunderstone  How proprietary coding works  Integration with dealers  Oracle – server integration Needed a Performance Culture  Due diligence in choosing vendors and applications  Follow through on implementation

15. Three “Gears” Long-Term IT PlanCreate A Unifying PlatformBuild A High-Performance IT Culture

16. Thank You