When John Hill joined Danbury, Conn.-based Praxair as CIO in 1997, he brought global experience and business acumen to a Fortune 500 company with an IT model that was, in his words, "immature" and "a collection of local organizations." A leading producer of industrial gases and surface coatings, Praxair operates in 43 countries and had sales of $5 billion in 2000. In addition to establishing global standards and some central control, Hill aimed to get his 500-member IT staff excited about Praxair's business mission and performance as well as its technical operations.
How did you communicate a new vision for IT?
Hill: It required some ideology, some principles. I introduced a slogan: "FIRST Things First." The acronym FIRST stands for Fundamental Impact on Results, Stock price or business Targets. That means everyone in IT should only be working on projects with clear business objectives. Another thing we did was develop a gating process. In the idea phase, there has to be a clear articulation of a project's business impact, the anticipated value, where value would come from, what resources might be needed and who the clear business owner or sponsor would be. Without these, a project cannot leave the idea phase. If it does, it goes into a more classic feasibility analysis: providing greater detail on business value, defining resources and risks, determining if it's a build or a buy decision.
Was there any resistance from IT staffers?
Some. We found that people needed basic financial training so that they could create justification for their business plans. What's discounted cash flow? What's the difference between expense and capital? We put together a training class on financial fundamentals, linking them to our gating process so people had templates to do a discounted cash flow on a project. So business language would be part of the IT training.
You're grooming IT people to influence business operations.
I think so. We want to have the IT folks evolve into business roles. We've done it the other way too--bringing in sharp businesspeople and giving them technical training or sponsoring them to get master's degrees in IT. It's healthy for an organization to have that movement between functions.
You report to the CFO. Does that relegate IT to a service function?
Managing IT is really managing two kinds of functions. One is a utility, which is cost-driven and focused on service levels. The other is like a venture capital fund where you manage resources with the idea of maximizing returns. Rather than focus on the broader reporting relationship, I've approached the more fundamental challenge of ensuring that IT directors participate in strategy-setting and management for the organizations they support.