2010 CIO Hall of Fame inductees tout business breakthroughs

The five accomplished executives we induct this year into the CIO Hall of Fame are leaders defined by the drive to test themselves and, in the process, push their organizations to new heights. They combine superb management with technology prowess to produce a line of sustained financial results for the public and private sectors.

Some of our honorees point to opportunities early in their careers that set them on a course to create competitive value from software and hardware. Like Frank Modruson of Accenture, who landed an entry-level technology job that he says taught him business lessons. And Tom Murphy of AmerisourceBergen (ABC), who worked for bosses that gave him room to experiment. Sure, luck may have played a role. But the wit to recognize and run with an opportunity has set apart these CIOs--as well as Tom Flanagan of Amgen, Filippo Passerini of Procter & Gamble and Brent Stacey of Idaho National Laboratory--throughout their careers.

See the complete list of Judges here, and learn about the honorary member of the 2010 class here. Check out the 2009 and 2008 honorees.

As a 26-year-old Navy officer, Flanagan was about to leave the service to begin a business career when he was asked to help set up a system using satellites and mainframe computers to provide military data to submarines thousands of miles away. Such a system was relatively new then, in the mid-1970s, and Flanagan didn't know much about how to do it, he says. He could have declined and got on with civilian life. He didn't. Not only did he do the job, but he did it so well that he was chosen to brief the most senior officials from the Department of Defense and President Jimmy Carter.

He remained in the Navy another 19 years, working on technology innovation and retiring as a captain.

"That's a lesson I've carried with me: When you're bored, get out of your comfort zone. Control your own destiny," says Flanagan, who is now CIO of Amgen, a $15 billion pharmaceutical and research powerhouse.

According to our judges, who are themselves among the 50 executives already in the CIO Hall of Fame, each of this year's inductees has distinguished himself through leading-edge projects, deft turnaround work and making brand-new business models possible.

Our judges are a critical lot, evaluating the applications of 32 worthy CIOs for patterns of professional growth and strong business results, as well as additional contributions to the IT field and the larger community. (See our list here.)

Barbra Cooper, group VP and North America CIO of Toyota and a Hall of Fame honoree in 2007,sought evidence of superior leadership in the careers of those CIOs she judged, as well as significant influence on the profession. "It takes time to prove you can survive and to show all dimensions of capability and leadership," Cooper says. "Here are people representing the highest standards in our industry."

In discussing with our CIO honorees their work and growth, it's clear that three key capabilities have helped each of them produce outstanding business results: wielding breakthrough IT, sharply managing financial issues and, perhaps most difficult, knowing the core self.

It's true that our Hall of Famers all hold badges of honor earned through large ERP implementations and integrating major acquisitions. But they also show the know-how and constitution that separate a strategist from a mere implementer.

Taking Risks

As a college undergraduate in the early 1980s, Frank Modruson worked at a three-person software house where he helped write and implement a billing module for municipal water utilities. In those days, many small utilities companies wrote bills by hand, a time-consuming process that deterred them from pursuing customers who didn't pay on time. As soon as they installed the new billing software, they could automatically charge late payments, the proceeds from which paid for the project within three months, Modruson says.

The experience taught him that IT could drive substantial financial results and got him thinking of the possibilities at bigger businesses. After earning a master's degree in computer science in 1987, Modruson joined the consulting firm now known as Accenture and has been there ever since. With tens of thousands of employees serving clients around the globe, it was a world apart from the custom software company where he got his start and gave him the chance to see the full financial impact technology can have on large companies. "They were working at scale. I remember thinking, 'This is cool.'"

The backing of a large organization can protect CIOs who take risks, Modruson notes. But CIOs still need to have the guts to do it, especially when controversial technology is at issue. Identifying breakthrough IT doesn't mean gurgling about gee-whiz gizmos. It means seeing which IT product, service or management technique -- new or not -- will crack a specific problem or create a new business opportunity.

At Royal Caribbean in the late 1990s, Tom Murphy purposefully went against what he knew to be his CEO's views by bringing Internet access to cruise ships. "He was a believer in the cocoon that cruising allows, that people cruise to get away," Murphy explains. "We knew he was wrong."

Murphy, now CIO of the $72 billion pharmaceutical distributor AmerisourceBergen, had his team outfit a ship with temporary Internet stations. They proved so popular that he had to shut them down two hours into a four-day trip because the long lines had disrupted the on-board lobby area, he says. "He never explicitly said I couldn't do it because I never asked him that question," Murphy chuckles. Soon after seeing how vacationers flocked to get online on the high seas, the CEO funded Internet cafes for all of the company's ships, putting Royal Caribbean ahead of its competitors.

At P&G, Filippo Passerini completed a major implementation of Cisco video conferencing technology in 2008, going from a two-site test to a wham-bang 43-country rollout. A serious chess player, Passerini figured the project would best succeed in a bold strike rather than a slow, gradual installation. He figured only a dramatic change -- getting so many global offices wired for video at once -- could break employees' habit of holding physical meetings. "We had to get enough pieces on the board to make the attack," he explains. "Otherwise, what? Go from two to 10, another six, another five or 10? No. We went to 43."

To ensure absolutely no obstacle prevented P&G marketers, scientists and managers from using video, he also decided his IT group would pick up all costs for the first two years. That's enough time to get a new workplace habit established, he says. But more importantly, by ensuring the technology was essentially free, he avoided the mire of business units dissecting the cost-benefit analysis of flying versus video conferencing each and every time they met. "Not only did we move fast," he says, "but we did it without creating any second thoughts because we took over all the risk."

Certainly, neither the Internet nor video conferencing were new technologies when Murphy and Passerini jumped in. The salient point is that they matched a specific business situation with not only the right technology but also the right tactics. "Sometimes you have to move people to places they didn't want to go," Murphy says.

An Eye on Value

Flanagan thinks quickly and with clarity. He recounts his time leading IT at what was then known as MCI WorldCom in terms of both his mission and the resulting numbers. He joined MCI upon retiring from the Navy in 1996 and became CIO in 2002, a week after the telecommunications company declared bankruptcy amid its infamous implosion. In the following eight years, Flanagan restructured the IT staff, resulting in a 40 percent reduction in resources and trimmed $600 million in operating expenses. "The time called for decisive action. Hard, tough calls," he says.

Like his fellow inductees, Flanagan doesn't settle for small gains from his work. "You could spend a lot of money, as I learned watching MCI and WorldCom. But it didn't always drive value," he says. Therefore, along with staff and spending cuts, he enhanced several IT systems to address core problems related to the company's financial troubles: new software systems for managing customer interactions, billing and sales forecasting.

Upon becoming CIO at Amgen in 2006, he launched a business transformation project that has nearly doubled net income per employee through the combined efforts of the business and IT. Amgen is rebuilding its entire IT infrastructure, including consolidating ERP systems worldwide to a single version of SAP. The company is also redesigning work processes to allow for faster collaboration among scientists through universal communications, telepresence, desktop video conferencing and enterprise search.

"You don't want to spend a lot of money for incremental improvement. We want quantum improvement," he says, adding that one way to measure success would be seeing breakthroughs in such areas as cancer research.

Brent Stacey acknowledges that quantifying the spending, saving and making of money can be tricky for CIOs, but he says the exercise is entirely necessary. As CIO of Idaho National Laboratory, which is part of the Department of Energy laboratories, Stacey views himself as a steward of taxpayer dollars.

The lab was created in 2005, spun off from Argonne National Laboratory West, where Stacey had been CIO at the Chicago location for three years. The Energy Department declared that Idaho National Laboratory would be the country's premier nuclear research, demonstration and deployment laboratory by 2015. Not only would the lab develop safe and sustainable nuclear energy systems, but it also would build relationships with petroleum and other energy companies to devise systems for creating new sources of energy. Lab executives had 10 years to make it happen. Five years in, the project is ahead of schedule, and Stacey's IT work is helping transform the lab from what was mainly a clean-up and environmental facility to a research and development institution partnering with industry. For example, the IT group there has built a high-performance supercomputer capability that the lab's researchers use for modeling and simulation of nuclear reactors and technology and that is rented out to other laboratories and strategic partners looking to test their own theories.

Stacey says he's careful with dollars and holds himself and his staff to financial standards that rival any for-profit organization.

At the same time, leaders at the quasi-public facility know the lab is part of the national critical infrastructure and therefore they must balance operational and financial efficiency with airtight security and foolproof disaster recovery. "Once in your career, you get to work on something that has huge impact for the nation and for society," Stacey says. "We've grown from [just over] $500 million to $1 billion. In private industry, that kind of growth is significant, but in a lab it's really significant."

Stacey has the chops to handle it: He co-led an 11-member team that in 1994 bought Scientech, a utilities services company then owned by a small group of investors and specializing in the federal government market. As CIO, he helped grow Scientech, a private company, several orders of magnitude from its starting point of $15 million in revenue and 60 employees. He declines to specify exact figures. "That was seminal learning for me," he says. "The CIO is the interface between business processes and competitive advantage."

If a CIO doesn't measure the economic impact of what he and his team do or if he disdains vying against other corporate projects for a green light, adds Murphy, he sells himself and his staff short.

"Put yourself out there. Show all your books," says Murphy, who, before AmerisourceBergen and Royal Caribbean, worked for Marriott helping to usher in PC networking in the 1980s. "I believe not in saying, 'This is how much IT needs in its budget every year.' I believe in saying, 'Here's what you want to do, business-wise. Here's how we can do it.'"

Know Thyself

A requirement for garnering big results is the ability to envision a future different from today and tease out what has to be changed or built to reach it. For Stacey, the future lies in helping to create a sustainable, national nuclear energy system. For Modruson, it's in building fine-tuned business systems on a grand scale. Watching a vision become reality inspires these CIOs, and knowing the enormous scope of that vision helps them elevate their work beyond the tactical.

Before anyone can promise bold moves, however, he had better know his own capabilities.

Stacey, for example, first realized the importance of introspection when, early in his career, he tried to sell a big business-process revamp but met roadblock after roadblock. When he left that organization and was again stymied trying to enact a similar plan, he recalls, he understood that the problem was him. "My approach was focused primarily on technical success, not fully understanding the business's immediate needs," he says.

Ever since, he has made sure to plot ways to communicate the business benefits, setting aside from those discussions his passion for technology minutiae, he says.

During Passerini's 29 years at P&G, he managed part of marketing and operations, became CIO in 2004, and in 2005 led the integration of The Gillette Co. -- 69 countries, and 115 distribution centers, offices, business processes and systems. Two years ago, Passerini was named president of the company's Global Business Services group, charged, as CFO Jon Moeller puts it, with making P&G one of the most technology-enabled companies in the world. All the while, Passerini likes to say, he has immersed himself in theories.

If you think such an immersion sounds passive, you're wrong.

One of the strongest guiding metaphors for Passerini comes from his love of chess. He notes players must think carefully, then move. Time is finite, which means that the longer you think, the less time you have to act. Think too little, however, and your move can hurt you. "There's a constant balancing act between how much do I think and how fast do I move," he says. "The same is true in business."

While Passerini is a former competitive chess player who also enjoys tennis, he doesn't do either to rack up wins, he says. He plays against himself, trying to perfect his game. That outlook mirrors his professional approach. If he'd continued to test the video conferencing technology and done a slow rollout, P&G would have sacrificed the edge it now has on competitors whose far-flung employees can't collaborate as easily, he says.

"Filippo is a strategist and purpose-inspired leader,"says CEO Bob McDonald. "He has transformed the way that business is done at P&G. It's this kind of leadership that helps us touch and improve lives, now and for generations to come."

Modruson, at Accenture, finds internal motivation in helping set young professionals on an upward career path. His own start is burned in his heart. Modruson's mom ran the family business, a small retail shop in Long Island, NY. When she passed away from cancer, teenaged Frank took over the store. "I remember my mom sitting me down when she was going to the hospital and saying, 'This is how you write a check. Pay attention.' I was forced to learn a lot about business early on."

Looking back, he says, the experience ignited in him the urge to mentor. He jokes that at 51, he's a year older than Cobol, and probably talks about things pretty foreign to Gen Y. Still, something sticks. Last year, he ran into a consultant from Accenture's financial services team who he'd helped to land an Accenture job in Japan. The consultant was back and asked about opportunities in IT. "He said to me, 'I know a number of people you've brought over to your team and I've liked working with them,' Modruson recalls. "People want to be a part of this. It's fun to see that happen."

Fresh Challenges

A Hall of Fame honor won't be the last accomplishment for these CIOs. Every one of them named goals they still want to achieve. Flanagan pushes himself to perform by taking on tasks he's not yet tried. That includes a companywide information-management strategy that will let Amgen scientists, researchers, operations and manufacturing, financial analysts, legal and HR collaborate across servers and across countries. Enterprise search is a key component. Learning keeps your nerve endings afire, he says, cementing the experience in both heart and mind.

Passerini will continue reshaping IT at P&G as a business that can compete with any outside service provider, he says. "We set ourselves up to operate as if in the open market."

IT is no longer the wide-open space it was when our honorees were starting their careers. No one is going to hand every employee an iPad the way everyone got a shiny new personal computer in the 1980s and just about anything that happened from there was an improvement compared to paper and pen. But these CIOs see that same sense of being on a frontier today in how IT can reinvent business models. "There's a great opportunity to surprise people with unique weapons to go to market with," says Murphy. "You have to find that zone now, and it can be equally exciting."

Follow Senior Editor Kim S. Nash on Twitter: @knash99.